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Six on-chain metrics suggesting Bitcoin is a ‘generational buying opportunity’

Six tried and tested on-chain metrics are repeating patterns last seen at the bottom of the past three bear markets.

Several on-chain metrics from the Bitcoin (BTC) network are flashing buy signals following this year’s rally.

Bitcoin has broken out of its torpor to notch up a 37% gain since the beginning of 2023. However, on-chain data is still signaling it could be a “generational buying opportunity” according to analysts.

On Jan. 24, researcher and technical analyst “Game of Trades” identified six on-chain metrics for his 71,000 Twitter followers.

The first metric is an accumulation trend score highlighting zones of heavy accumulation in terms of entity size and the number of coins bought.

“Large entities have been in deep accumulation mode ever since the FTX collapse,” the analyst noted before adding “similar accumulation took place in the 2018 and 2020 bottoms.”

The Bitcoin entity-adjusted dormancy flow is a measure of the ratio of the current market capitalization and the annualized dormancy value.

Whenever dormancy value overtakes market capitalization, the market can be considered in full capitulation which has been a good historical buying zone.

According to Glassnode, this metric fell to its lowest-ever level in 2022.

BTC entity- adjusted dormancy flow. Image: Glassnode

Bitcoin’s reserve risk can be used to measure the confidence of long-term holders relative to the price of BTC. This also fell to its lowest-ever level at the end of 2022, according to Glassnode data.

Bitcoin’s Realized Price (RP) is the value of all coins in circulation at the price they last moved, in other words, an estimation of what the entire market paid for their coins.

According to Woo Charts, Bitcoin has been trading below this level since the FTX collapse until Jan. 13. It is currently just above the RP which represents another buying opportunity.

The Bitcoin MVRV Z-score shows when BTC is significantly over or undervalued relative to its ‘fair value’ or realized price. When the metric leaves the extremely undervalued zone it is often considered the end of the bear market.

BTC’s MVRV Z-Score. Image: Glassnode

Finally, there is the Puell Multiple examining the fundamentals of mining profitability and its impact on market cycles.

Lower values, as they are at the moment, indicate miner stress and represent long-term buying opportunities.

Related: Bitcoin halts volatility at $23K as BTC hodlers see mass return to profit

The analyst concluded these six on-chain metrics are “pointing towards an exceptional risk-reward setup in Bitcoin.”

The metrics are all at similar levels to market cycle bottoms in 2015, 2018, and 2020, they added.

BTC is currently trading down over 1.9% over the past 24 hours at $22,675, according to Cointelegraph data.

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Wait and see approach: 3/4 of Bitcoin supply now illiquid

Around 76% of the total circulating Bitcoin supply is now illiquid according to on-chain analytics from Glassnode.

Bitcoin markets have been consolidating since the beginning of the year, but on-chain metrics are painting a more positive picture as more of the asset is becoming illiquid.

On-chain analytics provider Glassnode has been delving into Bitcoin supply metrics to get a better view of the longer-term macro trends in its weekly report on Jan. 3.

The findings revealed that although the asset has been trading sideways so far this year, more BTC has become illiquid. There has been an acceleration in illiquid supply growth which now comprises more than three quarters, or 76%, of the total circulating supply.

Glassnode defines illiquidity as when BTC is moved to a wallet with no history of spending. Liquid supply BTC, which makes up 24% of the total, is in wallets that spend or trade regularly such as exchanges and hot wallets.

“We can see that over the final months of 2021, even as prices corrected, there has been an acceleration of coins from liquid, into Illiquid wallets.”

The figures suggest that more Bitcoin is being transferred into storage indicating an increase in hodling habits and accumulation. The decline in highly liquid supply also hints that there may not be a major selloff or capitulation event at any time in the near future.

BTC liquid and illiquid supply as a percent of the total: Glassnode

The researchers concluded that these conditions indicate “divergence between what appears to be constructive on-chain supply dynamics, compared to bearish-to-neutral price action.”

Related: Just 1.3 million Bitcoin left circulating on crypto exchanges

In the same report, Glassnode stated that the total supply held by long-term holders has plateaued over the past month or so. This suggests that longer-term investors have stopped spending or selling coins and have become hodlers or even accumulators at this stage. “This provides another constructive view of market conviction,” it concluded.

The current supply held by long-termers is 13.35 million BTC, a decline of just 1.1% from October’s high of 13.5 million coins. Glassnode defines these long-term holders (LTH) as wallets or accounts that have held their Bitcoin for more than 155 days.

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Big Miners and Holders Keep Accumulating Bitcoin: Kraken’s ‘Shocktober’ Report

Big Miners and Holders Keep Accumulating Bitcoin: Kraken’s ‘Shocktober’ ReportMining operators and holders keep accumulating Bitcoin, according to the latest Kraken intelligence report, titled “Shocktober.” In the report, several metrics allude to a bullish view for the months to come. In contrast, mining pool contributors and small miners have taken profits, these being more prone to sell due to market movements. ‘Shocktober’ Report Paints […]

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Bitcoin outflows from centralized exchanges surge to 100K BTC monthly

Centralized exchanges have experienced their heaviest week of Bitcoin withdrawals since November 2020.

Bitcoin outflows from centralized exchanges have surged to their highest level year-to-date, with roughly 40,000 BTC being withdrawn over the past seven days.

According to the Glassnode’s August 2 The Week On-Chain report, Bitcoin outflows have accelerated to a rate exceeding 100,000 BTC per month for just the third time since September 2019. The on-chain analytics provider estimates that just 13.2% of circulating BTC are currently held on exchanges — a new low for 2021.

“This represents a near full retracement of the significant inflow volume observed during the May sell-off,” the report noted.

BTC Exchange Net Position Change - Glassnode

Outflows surged to nearly 150,000 BTC monthly at the end of April 2020 following the violent “Black Thursday” crash that saw crypto prices tumble by more than 50% in less than two days after then-U.S. President Trump announced a travel ban between Europe and the U.S. in March as the coronavirus pandemic intensified. Despite the aggressive crash, Bitcoin had rebounded by 150% by the end of May 2020, driving heavy accumulation.

Outflows again came close to 150,000 BTC monthly in November 2020 as Bitcoin surged to test its then-record price high of $20,000, with BTC rallying into new all-time highs the following month.

Glassnode notes divergent trends between Coinbase and Binance throughout most of 2021, with Coinbase having experienced significant outflows while Binance has been the largest recipient of BTC.

However, Binance’s reserves are now beginning to dwindle, with 37,500 BTC (worth roughly $1.5 billion) exiting the exchange over the past week.

Coinbase balances remained steady in June. While the exchange received 30,000 BTC in mid-July, 31,000 BTC was withdrawn from the platform this past week.

Related: Traders are withdrawing 2,000 BTC from centralized exchanges daily

Looking at the macro sentiment, the on-chain analytics provider referred to its “Liveliness metric” to identify trends in accumulation.

The metric, which measures the ratio of the sum of coin days destroyed and the sum of all coin days ever created, indicates a broad trend of accumulation following May’s immediate sell-off.

“It seems that HODLing and accumulation is the most likely dominant trend in the on-chain market,” the report concluded.

BTC Liveliness chart: Glassnode

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Bitcoin crashes below $30K, but on-chain data suggests accumulation is brewing

Despite the Bitcoin markets slipping below $30,000, on-chain data suggests accumulation may be underway, as $1 billion worth of BTC leaves exchanges each month.

Despite Bitcoin crashing below $30,000 for the first time in one month, on-chain metrics suggest whales may be steadily accumulating BTC.

According to Glassnode’s July 19 “The Week On-Chain” report, the Bitcoin reserves of centralized exchanges have continued to evaporate despite the recently sustained bearish momentum, with an average of 36,000 Bitcoin (worth roughly $1 billion) being withdrawn from exchanges monthly.

Glassnode infers the shrinking Bitcoin reserves on exchanges as indicating large investors moving BTC into secure storage, rather than leaving their coins on exchanges in preparation for selling.

Bitcoin net position change on exchanges: Glassnode

Glassnode also identified a recent increase in the number of entities hodling Bitcoin since May, increasing from roughly 250,000 to nearly 300,000 today. Glassnode describes “an entity” as a unique on-chain cluster of associated addresses.

The on-chain analytics provider noted that the number of “sending entities” — unique address clusters associated with selling — has fallen by roughly one-third from 150,000 to 100,000, while “receiving entities” — addresses linked to accumulation or holding — have increased by roughly than 20% from 190,000 to 250,000 over the same period.

Bitcoin changes in on-chain entities: Glassnode

Despite emphasizing signals suggesting accumulation, Glassnode noted heavily divided market sentiment, predicting extreme volatility may be imminent for the markets:

“We have an extremely divided market, and one with a likely expansion of volatility just around the corner.”

Related: Traders are withdrawing 2,000 BTC from centralized exchanges daily

It added that miners are now also in accumulation mode despite expenses incurred in the great migration in the wake of China’s mining crackdown. The miner net position change metric indicates that more than 3,300 BTC per month is currently being accumulated.

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Traders are withdrawing 2,000 BTC from centralized exchanges daily

Surging BTC outflows from centralized exchanges suggest the Bitcoin markets could be in an accumulation.

The number of Bitcoin held on centralized exchanges has consistently fallen since late May, with roughly 2,000 BTC (worth roughly $66 million at current prices) flowing out of exchanges daily.

Glassnode’s July 12 Week On-Chain report found that Bitcoin reserves on centralized exchanges have fallen back to levels not seen since April, the month that saw BTC blast to its all-time high of roughly $65,000.

The researchers noted that during the bull run leading up to this peak, relentless depletion of exchange coin reserves was a key theme. Glassnode concludes that much of this BTC went to the Grayscale GBTC Trust or was accumulated by institutions, driving “a persistent net outflow from exchanges.”

However, when Bitcoin prices slumped in May, this trend reversed as coins were sent to exchanges for liquidation. Now, the net transfer volume has moved back into negative territory again as outflows increase.

“On a 14-day moving average basis, the last two weeks in particular have seen a more positive return to exchange outflows, at a rate of ~2k BTC per day.”
Net BTC transfer volume to/from exchanges: Glassnode

The report also noted that the proportion of on-chain transaction fees represented by exchange deposits declined to 14% dominance this past week, following a brief peak to around 17% in May.

On-chain fees associated with withdrawals saw a notable bounce from 3.7% up to 5.4% this month, suggesting an increasing preference for accumulation over sales, it added.

Related: Bitcoin price falls under $33K, but on-chain data hints at BTC accumulation

The fall in exchange reserves appears to have coincided with an uptick in capital flows to decentralized finance protocols over the past fortnight.

According to DeFiLlama, the total value locked has increased by 21% since June 26 as it climbed from $92 billion to $111 billion.

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Willy Woo: ‘Rick Astley’ hodlers a key force again and on-chain signals suggest ‘recovery’

Those that are never gonna give up BTC are still accumulating according to the analyst.

Bitcoin technical analyst Willy Woo believes that this is not a bear market because on-chain indicators are signaling a recovery and the asset is still being bought by long-term hodlers.

The popular analyst’s comments came in an interview on the “What Bitcoin Did podcast on June 28. Woo stated that he does not believe that Bitcoin is in a typical bear market due to signs of accumulation showing on-chain.

Referring to the 1980’s hit song “Never Gonna Give You Up” by British pop artist Rick Astley, Woo stated:

“The ‘Rick Astley’ is the holder that keeps buying and never tends to sell much ... And of course Rick was very active over 2021, and then suddenly all the coins moved away from Rick to the weak hands — the speculative traders that buy and sell. Now we’re seeing that cross back into moving to Rick.”

He added that we are currently in a speculative phase and those coins that were sold earlier this year are slowly being absorbed by long-term holders.

Podcast host Peter McCormack revealed that he hasn’t sold any crypto assets yet and is still confident because there is “still too much going on and good stuff happening”.

Related: 3 things traders are saying about Bitcoin and the state of the bull market

Analyzing the current Bitcoin price chart, Woo stated that it is a cycle unlike any we’ve ever seen as the underlying structure is completely different. He stated:

“The price right now is going sideways bearish, it looks like a Wyckoffian accumulation price pattern and so if that plays out we should have that last wick down to $28K-$29K which should have been the final test of the bottom. Everything on-chain looks like it’s in recovery.”

Analytics provider Santiment appears to have noticed similar data and it noted that the supply of Bitcoin sitting on exchanges has steadily fallen back down and is getting locked away for safekeeping by hodlers.

Commenting on current regulatory pressure, which has escalated in China, the U.S. and the U.K., Woo stated:

“It’s like Bitcoin is now fighting the Final Boss in a video game … it’s really up against the central bankers, and much earlier than we ever thought.”

At the time of writing, Bitcoin was trading within its six-week range bound channel, down 3.7% over the past 24 hours at $34,653 according to CoinGecko. As reported by Cointelegraph, traders have been eying three key areas for the monthly candle closure.

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Data Shows Bitcoin Addresses in Accumulation Captures Fresh New Highs

Data Shows Bitcoin Addresses in Accumulation Captures Fresh New HighsAfter bitcoin prices dipped to a low of $30,066 per unit last week, lots of people have been focused on the panic sellers. Meanwhile, when bitcoin prices plunged, the number of bitcoin addresses in accumulation tapped an all-time high at 545,115 addresses. Number of Bitcoin Accumulation Addresses Hit New Highs Bitcoin (BTC) prices slid from […]

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Three-quarters of circulating BTC last changed hands for less than $10,800

After a recent spike in profit-taking, long-term Bitcoin investors are back to offloading coins at the same rate they were in 2020.

Research from on-chain analytics provider Glassnode has found that roughly three-quarters of circulating Bitcoin last moved on the blockchain when prices were below $10,800, suggesting most market participants are long-term holders.

Glassnode’s March 29 ‘Week on Chain report found that 25.43% of circulating BTC last traded between the prices of $10,800 and $58,800. With Bitcoin trading for $10,800 just six months ago, the data suggests one-in-four circulating BTC last changed hands during either Q2 2020 or Q1 2021.

The report notes the number of long-term Bitcoin bulls continues to increase, with many coins that have remained dormant since early in the current market cycle now being classified by Glassnode as long-term holdings, or LTH — coins that have not moved on-chain for at least 155 days.

As a result, the number of coins being classified as entering into “illiquid supply” has surged in 2021. The Illiquid Supply Change metric has shown that the 30-day change in supply is moving from a liquid or readily traded state into an illiquid state representing HODLed coins.

The report observed that accumulation rates exceeding 130k BTC per month has been consistently maintained throughout this bull market.

Glassnode’s Coin Days Destroyed metric, or CDD, also points to increasing hodling among long-term investors, with CDD suggesting seasoned investors are again realizing gains at a rate comparable to 2020 after a surge of profit-taking between November through January.

“The take home message here is that investors and traders have continued to buy into BTC, throughout this bull market,” said Glassnode.

Entity Adjusted CDD: Glassnode

Bitcoin’s “Hodlwave” metric, which visually breaks down Bitcoin’s supply based on when coins last moved on-chain, shows a spike in both long-term hodling and short-term circulation amid the current market conditions.

According to Unchained Capital’s Hodlwaves, two-thirds of Bitccoin’s supply has changed hands in the six months, roughly half of which last moved during January or February. Approximately 5% of BTC’s supply was active during the past seven days.

Hodlwaves: Unchained Capital

At the time of writing, Bitcoin was trading up 4% over the past 24 hours at $57,500 according to CoinGecko.

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