Short-Term Bitcoin Accumulation Loses Steam as the Bear Market Persists.
CryptoQuant analysis reveals a slowdown of Bitcoin (BTC) accumulation by short-term investors, but the markets could be seeing a reversal soon.
The buy-the-dip sentiment is largely propagated by the majority of the crypto community, but only a handful actually see it through. When the markets are down, most investors are more focused on their underwater positions than seeing an opportunity to increase their holdings.
A recent CryptoQuant analysis indicates that this practice has persisted in this cycle, as the Bear Market becomes more intense. CryptoQuant analyst, Dan Lim uncovered this metric in his recent report on the general outlook of bear and bull markets.
Lim cited the Bitcoin UTXO Age Bands chart in the range of 1 week to 1 month – the territory of short-term investors. “As with all investment products, this indicator shows people always buy the most near the highs. And the longer the market falls, the less short-term buying,” he said.
Bull and Bear market from sentimental perspective
“In the future, when you look at past bear markets, it’s likely to be, “I should’ve just bought it then.”.”
— CryptoQuant.com (@cryptoquant_com) September 21, 2022
As observed on the chart, short-term accumulation appears to have slowed down at the beginning of the year when the effects of the bear market kicked in. Despite a few cases of mild accumulation surges, purchases have seen a stunted growth till now. These mild accumulation surges can be attributed to the occasional relief rallies BTC staged along the way.
Taking this into consideration, Lim highlighted the fact that most investors who talk about buying the dip when the market is booming do not in fact carry out their initial plan when the market sees a prolonged downturn.
“And people who said they would buy when the BTC price falls, there are not many people who actually buy when the price falls for a long time,” he said. Situations like this are usually influenced by the dread of further dips, as most investors oftentimes do not believe the bottom is priced in yet.
Notwithstanding, Lim noted that it is only a matter of time before the markets set off on a path to recovery. The accomplished analyst mapped out two possible scenarios.
The first scenario which he dubbed Case 1 involves a period of consolidation at this price range before a takeoff. The second scenario, Case 2, sees a slight dip from this price before a reversal. And when either of these scenarios kicks in, Lim mentioned that investors, like always, will express regrets about not buying the dip.
Whichever becomes the reality, Lim has noted that whale accumulation is likely to help with Bitcoin’s recovery campaign despite the selloffs from short-term investors.
“However, like most things, the market moves against people’s psychology, and I am not sure if it will be Case 1 or Case 2, but if no one is buying as it is now, the whale will be ready at some point to lift the market,” he concluded.
Furthermore, both the BTC Exchange Reserve and Exchange Netflow metrics show some disturbing realities. BTC reserve on exchanges has recently seen a spike, indicating a higher selling pressure on investors. Additionally, net deposits of BTC on exchanges have risen of late.
Market watcher and CryptoQuant author JA Maartun pondered if this sudden rise in exchange reserve is influenced by preparation to hedge against further price declines as the community awaits the upcoming FOMC meeting.
+7,079 $BTC on Exchanges Reserves today.
— Maartunn (@JA_Maartun) September 21, 2022
Despite the recent trend of distribution from short-term investors, long-term holders appear to be accumulating more BTC with each price dip. The UTXO Age Bands in the range of 12 months up to 5 years see a significant boost in accumulation of late. The 12M ~ 18M category in particular has seen a surge since the start of the year.
Michael Saylor’s MicroStrategy revealed that they purchased additional 301 BTC between August 2 and September 19 in a recent SEC filing. This brings the company’s total BTC holding to 130k BTC, sealing its position as the largest institutional holder of the asset. The firm purchased the coins at an average price of $19,851.
MicroStrategy’s recent disclosure highlights the inverse reality of things with long-term whale investors. Despite the selloffs from short-term investors, whales remain largely unfazed and this attitude is just what the market needs. BTC trades at $19,135 as of press time, down 5.7% in the past week.
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