On-chain data: Long-term Bitcoin holders continue to 'absorb supply' at $30,000

Bear markets are usually marked by capitulation events, where frustrated investors eventually abandon their positions and asset prices either consolidate as inflows into the sector dwindle or begin the process of bottoming.

According to a recent Glassnode report, Bitcoin holders are now "the only ones left," and they appear to be "doubling down on a price correction below $30,000."

The number of non-zero balance wallets has leveled off over the past month, a process that followed the cryptocurrency market sell-off in May 2021, suggesting a lack of new buyers.

Unlike the sell-offs that occurred in March 2020 and November 2018, after which an uptick in on-chain activity “sparked the ensuing bull run,” the recent sell-off has yet to “stimulate an influx of new users” into the space. This suggests that current activity is largely driven by holders, the Glassnode analyst said.

signs of massive accumulation

While many investors aren't interested in BTC's sideways price action, contrarians see it as an opportunity to accumulate, as evidenced by the Bitcoin Accumulation Trend Score, which "has increased over the past two weeks." Close to a perfect score above 0.9".

According to Glassnode, during bearish trends, high scores for this indicator “are typically triggered after very significant price pullbacks, as investor psychology shifts from uncertainty to value accumulation.”

CryptoQuant CEO Ki Young Ju also took note of the idea that Bitcoin is currently in an accumulation phase, posting the following tweet asking his Twitter followers “why not buy?”

A closer look at the data reveals that the recent accumulation has been largely driven by entities with less than 100 BTC and more than 10,000 BTC.

During the recent volatility, the total balance of entities holding less than 100 BTC increased by 80,724 BTC, which Glassnode noted was “very similar to the net 80,081 BTC liquidated by the LUNA Foundation Guard.”

During the same period, entities holding more than 10,000 BTC added 46,269 BTC to their balances, while entities holding 100 to 10,000 BTC “maintained a more neutral rating around 0.5, indicating a relatively small net change in their holdings. "

Long term holders are still active

Long-term Bitcoin holders appear to be the main driving force behind the current price action, with some actively accumulating and others losing an average of -27%.

The total supply held by these wallets recently returned to an all-time high of 13.048 million BTC, despite some in the long-term holder community witnessing a sell-off.

Glassnode says:

“Barring a major token redistribution, we can therefore expect this supply metric to begin to climb over the next 3-4 months, indicating that holders continue to gradually absorb and hold this supply.”

The recent volatility may have put off some of the most dedicated Bitcoin holders, but data shows that most serious holders of Bitcoin are unwilling to sell "even if they are losing money now."