Short-term bitcoin accumulation is running out of steam as the bear market persists.
CryptoQuant analysis reveals a slowdown in Bitcoin (BTC) accumulation by short-term investors, but markets may see a reversal soon.
The buy the dip the sentiment is spread widely by the majority of the crypto community, but only a handful actually see it. When markets are down, most investors focus more on their underwater positions than on whether to increase their holdings.
A recent CryptoQuant analysis indicates that this practice has persisted in this cycle, as the bear market becomes more intense. CryptoQuant analyst Dan Lim discovered this metric in his recent report on the general outlook for bear and bull markets.
Lim cited the Bitcoin UTXO Age Bands chart in the 1 week to 1 month range – territory for short-term investors. “As with all investment products, this indicator shows that people are always buying closer to the highs. And the longer the market goes down, the less it is buying in the short term,” he said.
Bull and bear market from a sentimental point of view
“Going forward, when you look at past bear markets, it’s probably going to be ‘I should have bought it then. “.”
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— CryptoQuant.com (@cryptoquant_com) September 21, 2022
As seen on the chart, short-term accumulation appears to have slowed at the start of the year as the effects of the bear market kicked in. Despite a few instances of slight surges in accumulation, buying has seen stunted growth so far. These slight surges in accumulation can be attributed to the occasional relief rallies BTC has held along the way.
Considering this, Lim pointed to the fact that most investors who talk about buying the dip when the market is booming actually fail to realize their original plan when the market is in a prolonged downturn.
“And the people who said they would buy when the price of BTC goes down, there aren’t many people who actually buy when the price goes down for a long time,” he said. Situations like this are usually influenced by the fear of further declines, as most investors often do not believe that the floor is already priced in.
Still, Lim noted that it’s only a matter of time before markets hit the road to recovery. The accomplished analyst has mapped out two possible scenarios.
The first scenario he dubbed Case 1 implies a period of consolidation at this price range before a takeoff. The second scenario, Case 2, sees a slight drop in this price before a reversal. And when either of those scenarios comes into play, Lim mentioned that investors, as always, will express regret for not buying the dip.
Whatever the reality, Lim noted that the accumulation of whales is likely to help Bitcoin’s recovery campaign despite the massive sell-off from short-term investors.
“However, like most things, the market moves against people’s psychology, and I don’t know if it will be case 1 or case 2., but if no one is buying like they are now, the whale will be ready at some point to lift the market,” he concluded.
In addition, the BTC exchange reserve and Net exchange flow the measurements show disturbing realities. The supply of BTC on exchanges recently spiked, indicating higher selling pressure on investors. Additionally, net deposits of BTC on exchanges have been increasing lately.
Market watcher and CryptoQuant author JA Maartun wondered if this sudden increase in the FX reserve was influenced by preparing to hedge against further price declines as the community awaits the next meeting of the FOMC.
+7,079 $BTC on exchange reserves today.
— Maartunn (@JA_Maartun) September 21, 2022
Despite the recent trend of distributing short-term investors, long-term holders seem to be accumulating more BTC with each price drop. The UTXO Age Groups in the range of 12 months up to 5 years see a significant increase in the accumulation of delay. The 12M ~ 18M category in particular has seen a strong increase since the beginning of the year.
Michael Saylor’s MicroStrategy revealed that it purchased an additional 301 BTC between August 2 and September 19 in a recent SEC filing. This brings the company’s total BTC holding to 130,000 BTC, sealing its position as the largest institutional holder of the asset. The company purchased the coins at an average price of $19,851.
MicroStrategy’s recent disclosure highlights the reverse reality of things with long-term investors in whales. Despite massive selling off by short-term investors, the whales remain largely unfazed and that attitude is exactly what the market needs. BTC is trading at $19,135 at press time, down 5.7% in the past week.
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