Embarking upon what might be a tedious journey, Bitcoin investors may need to bide their time for an improved market sentiment.
Bitcoin, presently valued at $30,438, could potentially experience up to a year and a half of a static market trend as the bull run continues to consolidate, according to a new projection.
“The Week On-Chain,” the latest weekly report from analytics company Glassnode, warns Bitcoin investors of an impending phase of slow-paced market progress.
Glassnode Foresees Year-long, Steady Bitcoin Acquisition
Bitcoin saw a surge of 70% in Q1 2023 but has been grappling to sustain this momentum, leading to a split in opinions regarding its forthcoming price trajectory.
The upcoming 2024 block subsidy halving looms, with some forecasting a sharp rise throughout the next year, while others anticipate a longer duration—possibly until 2025—before a fresh peak is reached.
Glassnode points out evidence of a characteristic pre-bull market phase unfolding, but this will call for substantial patience from long-term Bitcoin holders.
By examining the “liveliness” of the Bitcoin supply—determined as Bitcoin holders’ tendency to retain or disburse their coins—the study indicates widespread accumulation.
Glassnode’s report explains, “Liveliness currently shows a multi-year macro downtrend since peaking in May 2021 as the bear market emerged. A parallel can be drawn to the 2018-20 cycle, with coins consistently moving into cold storage, and thus becoming unavailable in the market due to the ‘HODLer’ cohort.”
The report elaborates, “This group is currently gathering coins at a monthly pace of about 42.2K BTC, indicating that price-insensitive individuals are absorbing a significant portion of the existing supply. Comparing this pattern to previous cycles, we can deduce that this consistent, gradual accumulation phase began roughly 2 years ago and could extend for another 6 to 12 months.”
Decreasing exchange balances suggest that the supply is gradually becoming more illiquid, essentially signifying that they are being secured in private cold storage and are off the market.
Continuous Wealth Transfer in Bitcoin Ecosystem
The speculative end of the hodler base, referred to as short-term holders who hold coins for up to 155 days, has also been a point of interest.
These investors’ collective cost basis, approximately $26,400, serves as a potential short-term support zone.
Glassnode additionally notes that not all players are in the accumulation phase based on wallet entity size. Whales, or the entities holding the highest volume, are presently “net distributors.”
“Overall, the market seems to be experiencing a period of quiet accumulation, hinting at an undercurrent of demand, regardless of the recent regulatory challenges affecting major exchanges,” Glassnode asserts, referring to the latest regulatory implications in the United States.
For a significant trend shift to happen, the analysts suggest it would require another halving event to pass.
The researchers wrap up by stating, “Most metrics of market vitality display a scarcity of enthusiasm. Aspects such as volatility, volumes, and realized value are at multi-year lows, suggesting that liquidity and excitement are giving way to investor indifference.”
They add, “Nevertheless, the underlying trend of wealth transfer to the price-insensitive HODLer group remains steady. If historical cycles are a reliable guide, it could suggest that a phase of disinterested sideways market movement is in our future, potentially lasting between 8 to 18 months.”