Bitcoin Investors Shift to Distribution as Demand Fades, Price Declines

Bitcoin investors have recently shifted towards strong distribution as demand for the cryptocurrency fades, according to a report by Glassnode. The on-chain analytics firm highlighted this trend in its latest weekly report, which focuses on the Bitcoin Accumulation Trend Score. This indicator measures the degree of accumulation or distribution among Bitcoin investors by analyzing balance changes in their wallets over the past month and weighing these changes against the size of their holdings.

The Accumulation Trend Score ranges from 0 to 1, with values close to 1 indicating significant accumulation by large investors or a large number of small entities. Conversely, values near 0 suggest a lack of accumulation or distribution. The report revealed that the Accumulation Trend Score has been at a low level recently, indicating a shift towards distribution. This trend is evident in the chart shared by Glassnode, which shows that the market was experiencing heavy accumulation during the last couple of months of 2024, but this has since shifted to distribution.

This shift towards distribution is likely to have contributed to the recent decline in Bitcoin's price. The report notes that the previous period of accumulation was followed by a phase of strong distribution, which led to a long period of consolidation for Bitcoin. However, this time, the cryptocurrency has seen a significant decline, and it is possible that as long as the Accumulation Trend Score remains in this zone, the coin's price will continue to suffer.

Glassnode also shared another metric in the report that provides more granular details about market behavior. This metric looks at how much buying last occurred at particular cost basis levels. The chart shared by the analytics firm shows that Bitcoin investors were buying the 'dip' when BTC first entered into this bearish phase, implying they still believed the bull run to be on. However, during the latest crash, this hasn't been the case, as these price levels still don't host the cost basis of any significant part of the supply.

This shift towards distribution and the lack of significant buying at current price levels suggest that investor sentiment has turned bearish. The report notes that while the Accumulation Trend Score is a useful indicator for gauging the trend being followed by the market as a whole, it can hide the granular details related to market behavior. The additional metric shared by Glassnode provides more insight into how investors are behaving at different price levels, and this information can be useful for traders and investors looking to make informed decisions about their Bitcoin holdings.