On-Chain Data points to one concerning sign regarding Bitcoin price
In accordance Glass nodethe latest Bitcoin rally appears to be showing signs of weaker accumulation, as seen in the Bitcoin Accumulation Trend Score.
“The Bitcoin Accumulation Trend Score has begun to soften during this rally. This follows a near-perfect two months of aggressive balance increases following the LUNA collapse and again in June, primarily driven by the Shrimp and Whale cohorts,” Glassnode wrote alongside a Bitcoin Accumulation Trend Chart score.
The #Bitcoin Accumulation trend scores have started to soften during this rally.
This follows a near-perfect two months of aggressive balance increases following the LUNA collapse, and again in June, driven mainly by the Shrimp and Whale cohorts
Live Chart: pic.twitter.com/bEtaX91GCL
— glassnode (@glassnode) 11 August 2022
According to the on-chain research firm, the metric, which measures between 0 and 1, has softened back to equilibrium levels, suggesting a balance between accumulation and distribution. If the accumulation trend is any indication, this could be a worrying sign for the Bitcoin price as it could suggest further weak price activity with buyers and sellers lining up.
The relative size of entities actively accumulating and distributing coins on the chain in terms of their Bitcoin holdings is reflected by the accumulation trend score indicator. The Accumulation Trend Score’s scale reflects both the entity’s balance (also known as its Participation Score) and the number of new coins it has bought or sold during the previous month (their Balance Change Score).
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The indicator’s registration values close to 1 indicate that investors are accumulating with increasing balances. However, the indicator showing values close to 0 may suggest that the market pattern is still net distribution.
Bitcoin price action
Bitcoin and digital asset markets reacted strongly to the July US consumer price inflation data released on Wednesday, as Bitcoin again traded towards the $25K level. Core CPI was unchanged with an increase of 5.9%, compared to expected growth of 6.1%, a relief for the markets. At the time of publication, however, Bitcoin was down 1.88% at $23,987 after trimming earlier gains. The leading cryptocurrency was up 3.48% on the week.
Another positive development for Bitcoin concerns the announcement of the largest asset manager in the world, BlackRock, making a significant inroad into the cryptocurrency markets by introducing its first ever investment product directly in Bitcoin.
