Bitcoin Accumulation Signals Market Confidence

Bitcoin’s selling pressure has significantly decreased in recent months, indicating a shift among long-term investors towards retaining their holdings, as noted by Glassnode’s latest analysis.

The “Value Days Destroyed (VDD) Multiple” has experienced what Glassnode’s lead analyst, James Check, describes as an “epic cooldown.” This on-chain metric, which assesses the spending behavior of Bitcoin relative to its annual average, emphasizes the activity of coins that have remained stationary for extended periods. A decrease in this ratio suggests a move away from selling by long-term holders, back towards a tendency to hold, or “HODL.”

Check elaborated on this trend in a recent tweet: “Old coins have stopped moving on-chain, which gives room for new demand bids in a market with limited supply. Long-term holders are likely waiting for higher prices to be motivated to sell.”

Historically, significant price corrections during Bitcoin bull runs are often attributed to these long-term holders cashing out when prices surge well above their initial purchase levels. Despite a general increase in long-term holder supply, sharp declines have occurred during major bull runs, including the early 2021 and early 2024 rallies.

An extreme reading on the VDD Multiple—above 2.9—has consistently identified local and absolute market peaks, such as the 2017 peak coinciding with Bitcoin’s third halving. Recently, in March, this ratio soared above 4.0 but has since corrected to below 1.4, signaling a return to more typical market conditions.

Julio Moreno, Head of Research at CryptoQuant, highlighted another aspect of this trend: “The long-term holder spending as a percentage of Bitcoin’s total supply has decreased from almost 5% in March to 2% in April, indicating a reduction in spending.”

Last week’s market activity also revealed significant moves by Bitcoin whales, as reported by CryptoQuant CEO Ki Young Ju. These prominent investors acquired 47,000 BTC in just 24 hours following a dip below $57,000 at the beginning of May. This buying spree was seen as a strategic move during a standard bull market correction, with analysts like Check suggesting it was an opportune moment to buy the dip.

Furthermore, Bitcoin ETFs saw a significant turnaround last Friday, with $379 million in inflows. This marked a notable recovery from a week of consistent outflows and represented the most robust day for these investment products in weeks.

The recent cooling of Bitcoin’s VDD Multiple and the strategic acquisitions by long-term holders and whales signal a robust confidence in the market. Investors are advised to monitor these trends closely, as they could indicate both current stability and future potential in Bitcoin’s price trajectory.