How Bitcoin’s shifting dynamics can affect BTC

• Large holders of BTC are no longer in accumulation mode.
• Although the net taker volume was in a deep negative zone, traders’ sentiment remained bullish.

Bitcoin’s [BTC] on-chain activity has undergone a noticeable shift recently, marking a departure from the previous accumulation trend. For BTC’s price action, the balance between accumulation and distribution is critical to understanding market sentiment. And one metric that explains this is the accumulation trend score.

Read Bitcoin’s [BTC] Price Prediction 2023-2024

Analysis of the metric suggests a transition towards a more widespread distribution of Bitcoin. As an indicator of market behavior, the accumulation trend score reflects the number of new coins accumulated or sold within a specific period.

Power has changed hands 

When the accumulation trend score is closer to one, it means that large entities are accumulating. But when the metric inches closer to zero, it depicts a shift toward selling. At press time, the Bitcoin accumulation trend score was 0.05, indicating that large holders’ sentiment was toward the latter.

Source: Glassnode

Earlier on, AMBCrypto reported that whales were accumulating Bitcoin in large numbers. And this action was instrumental to the coin’s rise above $30,000 at one point. Therefore, the change in sentiment could have impacted on the recent consolidation BTC has had to deal with.

If this metric continues to stay the same, then BTC’s consolidation or drawdown may continue to linger. Furthermore, CryptoQuant’s analyst JA_Maartunn noted on 12 August that the BTC’s inability to climb could be linked to the net taker volume.

The net taker volume measures the difference between the buying and selling volume of Bitcoin’s futures contracts. By taking the metric into historical uses, the analyst referred to 2021 saying that,

“In May 2021, Bitcoin was trading at around $60,000, while Taker Sell Volume was $600 million higher than Taker Buy Volume. This indicates heavy selling through market orders, even though the price was still high.”

So, when the net taker volume is at deep positive values, and the price is relatively low, it means that aggressive buying is taking place. But Bitcoin’s case was different. According to the chart shared by Maartunn, the net taker volume was negative, indicating heavy selling pressure. 

Source: CryptoQuant

Enthusiasm reigns regardless

Despite the heavy selling pressure, Santiment revealed that the funding on Binance was 0.01%. A positive funding rate means that long-position traders are dominant and willing to pay funding to short traders.

Conversely, a negative funding rate implies that short traders are paying a funding fee to longs to keep their positions open. Therefore, the metric’s press time state implies that bullish sentiment thrived.

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Source: Santiment

However, traders may need to watch out for the ongoing accumulation and distribution. If Bitcoin’s distribution continues to outpace the former, then it’s only a matter of time before some longs become liquidated. That’s if the BTC price shrinks sharply.