The crypto markets experienced the sharpest drop since July 2021, correcting up to 52%. While the macro bear scenario is still heavily trending, some important on-chain indicators are showing how long-term investors are taken aback by the news, with whales continuing to accumulate.
Bitcoin ownership through Dip
Data from IntoTheBlock classifies all addresses as holders that have held assets for a weighted average time of at least one year. Rising long-term investors suggest the belief that an asset will maintain or increase its value over time, a key characteristic of an asset’s store of value.
In the case of bitcoin, there has been a steady increase in the number of holders regardless of price movement, through recent corrections and even the sharp crash experienced in March 2020.
Even as the bitcoin price has been in a prolonged decline since November, the number of holders has increased by 3.02% over the past 30 days. The above statement is reaffirmed when analyzing the percentage of umoved Bitcoin.
The Unspent Transaction Output Age Indicator measures the volume of transactions being created and categorizes them by time frame. By doing this, the UTXO edge indicator divides the number of tokens (such as the number of BTC in the case of bitcoin) by the time they last moved from one address to another.
Recently, BTC’s circulating supply volume that hasn’t moved for at least 12 months is approaching 60%, which is higher than what we experienced during the March 2020 crash.
Large wallets in storage mode
And as it becomes clear that holders are taken aback by these price movements, the next question to be asked is are they accumulating?
The graph above shows the balance of bitcoins held by hodlers – passive investors who have held the asset for more than a year. It tracks accumulation patterns during different phases of the bitcoin cycle.
- While most retail buyers were scared during the March 2020 crash, these addresses had accumulated around 1 million BTC by October 2020, when the rally began.
- In early 2021, they gradually sold off a small portion of their holdings, and they are now starting to accumulate again, with bitcoin starting to drop in November.
- In just 30 days, these addresses increased their BTC holdings by 4.55%
As these holders increased their holdings, an increase in the volume held by addresses holding 1k-10k BTC also suggests an accumulation pattern.
- Addresses with more than 1k-10k BTC are clearly institutional players or whales in crypto parlance
- They lose their holdings in these addresses after large rallies (as happened in March and October) and patiently wait to buy at lower levels (like in May and in the last few weeks).
- In just 30 days the volume of these addresses increased by 1.03%, increasing their holding by 5.26m BTC.
While market downturns are common, savvy investors should keep an eye on leading indicators to spot emerging fundamentals from recent and upcoming developments.
This research post was written by Daniel Ferraro for Cryptopotato on behalf of IntoTheBlock.
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