Bitcoin Market Update

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Bitcoin has faced significant sell-side pressure since the beginning of the year. Although this isn’t surprising, let’s delve deeper.

Glassnode has tracked Bitcoin’s cyclical behavior, indicating that the latest “distribution phase” (signifying selling) commenced in January.

The Accumulation Trend Score, which measures the change in aggregate on-chain balances, suggests that sell-side pressure will persist. However, this score is also affected by larger entities’ movements.

Before late February, a trend emerged of accumulating Bitcoin positions within the $95,000 to $98,000 range, but this trend has ceased due to changing liquidity conditions (thanks to macro factors).

Currently, the accumulation range is between $78,000 and $92,000, which Glassnode describes as “weak.”

This decline indicates a diminishing interest in buying the dip at present.

Glassnode noted, “Using the cost-basis of Short-Term Holders, we can observe that market momentum and capital flows are negative, indicating decreased demand strength. Investor uncertainty is affecting sentiment and confidence.”

This shouldn’t come as a surprise, especially with recent headlines hinting at a possible US recession and disappointing economic data.

I understand if you think, “Investing in Bitcoin diversifies your portfolio away from these macro concerns!” You are correct on one level, but there’s more nuance. Glassnode’s insight on larger entities implies that institutions with Bitcoin exposure may offload it as a risk asset when conditions turn more favorable.

Currently, the narrative for Bitcoin as “digital gold” hasn’t fully materialized. Nevertheless, progress continues with every cycle.