Key Takeaways
Bitcoin’s rebound to $111k came with declining short-term holder selling and fresh retail accumulation. Will sharks sustain their accumulation trend long enough to signal true market confidence?
After hitting a low of $107,270, Bitcoin [BTC] rebounded to a local high of $111,787, signaling easing downward pressure.
Amid this cooldown, analysts speculated on Bitcoin’s prospects. One of them, Bitcoin Vector, argued the Risk Off Signal was easing.
This could be a good thing for Bitcoin. Here’s the reasoning.
Bitcoin’s Risk Off signal is stabilizing
According to Bitcoin Vector, the Risk Off Signal eased and retraced toward a low-risk regime.
In his analysis, Vector observed that the market correction hadn’t fully pressured participants. In fact, only ~9% of Bitcoin’s supply was in loss, compared to 25% at cycle bottoms and more than 50% in prior bear markets.
Source: Glassnode
As a result, the Risk-Off Signal stabilized, implying that although Bitcoin was facing downward pressure, it remained relatively moderate.
At the same time, BTC has been attempting a breakout from price compression, where it has remained stuck since retracing from $124k ATH. Naturally, this highlighted that the market had yet to experience full capitulation.
Selling activity shrinks
In fact, selling activity has reduced significantly.
According to Checkonchain, Bitcoin’s Volume Spent among the 6-month to 1-day cohort or STH has diminished.
Source: Checkonchain
The 1–3 month cohort dropped from 21k BTC to 11k BTC. The 1-week–1-month cohort slid from 26k BTC to 23k BTC. Likewise, 1 day–1 week spending reduced from 58k BTC to 44k BTC.
Having said that, the decline in STH activity reinforced the case against panic selling.
Retail and Sharks are back to accumulation
On top of that, smaller investors returned to buying. Fish, Shrimps, Crabs, and Sharks all showed positive Balance Change.
Sharks, with 100–1k BTC, rebounded from a 7k BTC dip in late August to a 31.7k BTC increase at press time. Shrimp (<1 BTC) and Crabs (1–10 BTC) also turned positive, rising 2.2k BTC and 1k BTC respectively.
Source: Checkonchain
Typically, a positive Balance Change signals accumulation confidence.
Source: Checkonchain
As a result of increased accumulation from small-scale investors, Bitcoin recorded positive Exchange Netflow for three consecutive days.
Source: CryptoQuant
At press time, Netflow was -129 BTC, a significant drop from -18k BTC the previous day, signaling sustained outflows compared to inflow, a clear sign of accumulation.
Is BTC set for recovery?
According to AMBCrypto’s analysis, BTC recently bounced back as selling pressure eased while sharks and other retail investors turned to accumulation.
Therefore, these conditions position Bitcoin for potential sustained price recovery. So, if Retail and Sharks continue accumulating, we could see BTC reclaim $115k, as long as it holds above $110k.
However, if accumulation slows and selling returns, $110k could fail, sending BTC back toward $108k.
Source: https://ambcrypto.com/2-factors-are-behind-bitcoins-111k-recovery-but-is-it-a-bull-trap/