The month has witnessed Bitcoin markets slipping below $30,000 and despite that, data shows that BTC accumulation is the new trend. This can be attested by the $1 billion worth of BTC seen leaving exchanges every month. This crash is the first one this month to hit below $30K but on-chain metrics paint a picture of whales accumulating BTC.
Glassnode’s report, The Week on-chain (Week 29, 2021), shows that BTC’s reserves of centralized exchanges have shown a downward trend despite the recent bearish momentum experienced in BTC’s ecosystem. The report further adds that an average of 36,000 Bitcoin is withdrawn each month from exchanges; this is worth roughly $1 billion.
According to the on-chain analytics provider, the dwindling of Bitcoin reserves in the exchanges indicates that large investors are looking into securing and storing their coins. This is not a common occurrence since in the past, investors would leave BTC in the exchanges as they prepared to sell.
A Rise in BTC Hodlers
The report also pointed out a recent increase in the number of BTC hodlers since May – the hodler entities increased from approximately 250,000 to almost 300,000 today. The ‘entities’ mentioned by Glassnode are described as a unique on-chain cluster of associated addresses.
Glassnode also noted an uncharacteristic change in the sending and receiving entities where the former is the unique address cluster associated with selling while the latter are the addresses linked to hodling or accumulation. The report claims that sending entities have fallen by almost a third, from 150,000 to 100,000 while their receiving counterparts have increased by roughly 20% from 190,000 to 250,000. This is an uncharacteristic shift in on-chain entities since these changes are occurring over the same period.
Divided Market Sentiment
Glassnode added that despite the signals suggesting accumulation, there was more of a divided market sentiment. This division could lead to extreme volatility in the markets:
We have an extremely divided market, and one with a likely expansion of volatility just around the corner.
The report also pointed to miners also joining the accumulation bandwagon. Regardless of the huge expenses incurred after migrating due to China’s mining crackdown, miners prefer to accumulate their coins. The on-chain analytics provider claimed that the miner net position change metric suggests that miners are accumulating more than 3,300 BTC each month.