Bitcoin accumulation trend score shows shrimps buying, whales selling

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The accu­mu­la­tion trend score is an on-chain indi­ca­tor used to deter­mine whether enti­ties are active­ly accu­mu­lat­ing coins. It’s a much bet­ter indi­ca­tor of the over­all mar­ket sen­ti­ment toward buy­ing and sell­ing, as one can apply it to any cohort to deter­mine the behav­ior of any par­tic­u­lar group.

The indi­ca­tor com­pris­es two met­rics — an entity’s par­tic­i­pa­tion score and bal­ance change score. An entity’s par­tic­i­pa­tion score rep­re­sents its over­all coin bal­ance, while the bal­ance change score rep­re­sents the num­ber of new coins bought or sold over one month.

An accu­mu­la­tion trend score clos­er to 1 shows that the largest part of the net­work is accu­mu­lat­ing, while a score clos­er to 0 shows that the net­work is main­ly dis­trib­ut­ing its coins.

When applied to Bit­coin, the accu­mu­la­tion trend score pro­vides great insight into mar­ket par­tic­i­pants’ bal­ance size and behav­ior over one month. Exchanges and min­ers are exclud­ed from the met­ric to make the data more rep­re­sen­ta­tive of the mar­ket conditions,

bitcoin accumulation trend score
Bit­coin accu­mu­la­tion trend score (Source: Glassnode)

Bitcoin’s accu­mu­la­tion trend score from April 2020 to August 2022 shows four dis­tinct accu­mu­la­tion peri­ods. High­light­ed green on the chart above, the accu­mu­la­tion peri­ods occurred in March 2020, ear­ly 2021, ear­ly 2022, and late May 2022. The most sig­nif­i­cant accu­mu­la­tion rate was seen in March 2020 as the onset of the COVID-19 pan­dem­ic crushed glob­al mar­kets. The major sell-off we’ve seen in the wake of the Ter­ra (LUNA) crash in late May and ear­ly July trig­gered a major accu­mu­la­tion spree.

High­light­ed in red and yel­low, peri­ods of coin dis­tri­b­u­tion fol­lowed all peri­ods of accu­mu­la­tion. Some of the high­est rates of coin dis­tri­b­u­tion were seen dur­ing the exo­dus of min­ers from Chi­na in the sum­mer of 2021 and the start of Russia’s inva­sion of Ukraine in Feb­ru­ary 2022. This sum­mer has also seen many address­es sell their BTC as macro uncer­tain­ty push­es more investors to de-risk their portfolios.

Break­ing down the accu­mu­la­tion trend score by cohorts reveals the behav­iors of two major groups on the Bit­coin net­work — whales and shrimps. Whales are defined as address­es own­ing more than 1,000 BTC, while shrimps are address­es with less than 1 BTC.

Through­out July, both whales and shrimps have been aggres­sive­ly accu­mu­lat­ing BTC. The chart below shows the rate of accu­mu­la­tion by cohorts, with whales, shrimp, and every­one in between accu­mu­lat­ing for the entire month.

whales shrimp accumulation trend score bitcoin
Bit­coin accu­mu­la­tion trend score by cohorts (Source: Glassnode)

How­ev­er, as August pro­gress­es, the rate of accu­mu­la­tion among whales is begin­ning to decrease. The over­all macro uncer­tain­ty has pushed many large hold­ers to de-risk and sell off their BTC hold­ings. Many investors are antic­i­pat­ing a hard win­ter and look­ing to get as much liq­uid­i­ty as possible.

The only enti­ties still stack­ing BTC are shrimps, which have kept accu­mu­lat­ing even when the major­i­ty of large hold­ers began sell­ing off. July was the most sig­nif­i­cant accu­mu­la­tion month for small hold­ers since 2018, with shrimp increas­ing their bal­ance by over 60,000 BTC in a sin­gle month. The sec­ond-largest accu­mu­la­tion was in Decem­ber 2017 as Bit­coin reached its all-time high when shrimp accu­mu­lat­ed 52,000 BTC in a month.

bitcoin shrimp position change
Net posi­tion change for Bit­coin shrimps hold­ing less than 1 BTC (Source: Glassnode)

This shows that small hold­ers see Bitcoin’s price of around $20,000 as very attrac­tive and con­tin­ue to acquire coins for long-term invest­ment, even if its price remains flat.

Post­ed In: Bit­coin, Research

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