While the market continues to digest Bitcoin’s descent to $49,000 last week, signs that users are beginning to build up their Bitcoin are emerging, Glassnode said in a blog post on Tuesday.
Bitcoin has faced several headwinds in August including geopolitical tensions in the Middle East, recessionary fears in the U.S., uncertainty around the Japanese yen, and a general risk-off mood felt most sharply at the beginning of the month.
“Investors remain cautious ahead of US CPI this week,” QCP Capital wrote in a short investor note on Tuesday. “They will closely watch inflation numbers for guidance on whether the Fed will cut rates by 50 or 25 basis points in September. The odds are now evenly split.”
While tensions have eased somewhat among investors across broader markets, with major indices seeing a broad uplift on Tuesday, Bitcoin and crypto prices continue to linger.
The asset is up 1.6% on the day, just above $60,600, CoinGecko data shows. It remains up 37% in year-to-date terms but down about 18% from its March 14 all-time high of $73,000.
Last week’s activity sent shockwaves across all markets following Japan’s decision to end its effectively zero-interest-rate regime. Bitcoin holders, meanwhile, have been accumulating.
The Accumulation Trend Score, an on-chain metric assessing the gradual acquisition of assets by users, has hit its highest value above a score of 1, suggesting significant activity over the past month, Glassnode said.
The shift towards holding is further supported by data showing that long-term holders, who had previously sold heavily during the price peak in March, are now increasing their Bitcoin holdings.
Over the last three months, more than 374,000 BTC have transitioned into long-term holding status.
“From this, we can infer that the propensity for investors to hold onto their coins is now a larger force relative to their spending pressures,” Glassnode said.
Despite the recent heavy selling last week, Bitcoin's price is still above what most active investors paid for their coins on average. The level is supposedly a critical threshold, separating bullish from bearish sentiment.
The market's ability to find support at this level indicates underlying strength and suggests that investors are still optimistic about Bitcoin's short- to medium-term prospects, Glassnode noted.
