Here’s what the current bitcoin rally might need to resume, based on the trend followed by a similar rally in April 2019.
Bitcoin Accumulation Trend Indicator Decreased Lately
According to the latest weekly report from glass knot, an assessment of the accumulation trend shows that investors have been distributing bitcoins lately. The Accumulation Trend Score is an indicator that measures whether investors have bought or sold in the last 30 days.
To calculate the score, the metric takes into account both the cumulative balance changes in investors’ wallets and the size of their wallets. The indicator gives more weight to large organizations such as whales and institutional investors.
So, whenever the value of the indicator is close to 1, it means that large objects like these are piling up right now (or conversely, a huge number of small investors are piling up). On the other hand, valuation values close to zero mean that large objects are currently distributed or, more simply, they simply do not accumulate.
Now here is a chart showing the trend of the 7-day moving average (MA) of the bitcoin accumulation trend over the past few years:
Looks like the 7-day MA value of the metric has fallen in recent days | Source: Glassnode's The Week Onchain - Week 7, 2023
As shown in the chart above, the bitcoin accumulation trend indicator has declined recently as the rally has continued and has assumed distribution values (colored in shades of red/orange and marked with a “D” under the curve).
The indicator value is now below 0.25, which means that large companies have participated in a decent amount of selling in recent days, using the current profit-taking opportunity.
The rally that this one is reminiscent of is the April 2019 price spike, which was also the rally that took Bitcoin out of the bottom opening phase of the bear market of that cycle.
As it is now, the April 2019 rally also showed that the accumulation trend indicator shows distribution values initially up from the lower zone. However, this selling was not enough to stop the rally at that time, and it looks like the distribution was exhausted soon as the indicator rose back to accumulation values.
This fresh accumulation (marked in shades of purple) has helped the price of the cryptocurrency to resume a sharp jump, as shown on the chart by the “A” symbol.
If the current bitcoin rally is indeed going to follow the same path as its predecessor in April 2019, then it looks like large institutions will need to show some continued accumulation to outweigh the distribution and help the currently halted rally continue. .
Bitcoin Price
At the time of writing, Bitcoin is trading around $21,800, down 5% from the last week.
The value of BTC seems to have gone stale since the decline earlier in the week | Source: BTCUSD on TradingView
Credit : www.newsbtc.com
