How Does Bitcoin Investor Behavior Shape Trends? Glassnode Reveals

Keshav Verma

4 months ago

2 mins read

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The on-chain analytics firm Glassnode has explained how Bitcoin investor behavior tends to reflect in price trend reversals and continuations.

Glassnode Highlights Key Behavioral Patterns Behind Bitcoin Moves

In a new thread on X, Glassnode has shared a new way to categorize Bitcoin investors based on their on-chain spending patterns. Under this indicator, called the Supply by Investor Behavior, there are five cohorts: Conviction Buyers, First Buyers, Momentum Buyers, Loss Sellers, and Profit Takers.

First Buyers, Loss Sellers, and Profit Takers are pretty self-explanatory. Conviction Buyers refer to the investors who buy despite a decline in the cryptocurrency’s price, while Momentum Buyers refer to those who buy during uptrends.

“The metric tracks the cumulative token supply held by each cohort over time,” notes the analytics firm in the chart’s description on its website. “To focus solely on investor behavior, we exclude exchanges and smart contracts.”

Here is the chart shared by Glassnode that shows the trend in the indicator over Bitcoin’s history:

Bitcoin Supply By Investor Behavior — How the supply held by various behavior-based cohorts has changed | Source: Glassnode on X

To showcase how the behavior of these groups has an effect on the asset’s trajectory, the analytics firm has zoomed in on the data of two cohorts: Conviction Buyers and First Buyers.

First, here is the chart specifically for the Bitcoin Conviction Buyers:

From the graph, it’s visible that the BTC supply held by the Conviction Buyers generally observes a spike alongside inflection points in the cryptocurrency’s price. In particular, their supply tends to reach a peak coinciding with bear market lows. These investors also step in to buy dips during uptrends, helping stabilize pullbacks.

“But conviction alone isn’t enough to spark a rally – that’s where First Buyers come in,” explains Glassnode. Below is a chart that highlights the role of the First Buyers.

Bitcoin First Buyers — Looks like the supply held by these investors has shown a reversal recently | Source: Glassnode on X

As displayed in the chart, demand from First Buyers went up alongside Bitcoin’s recovery out of the bear market, with a particularly sharp surge coinciding with the bull rally in Q1 2024.

The supply of the First Buyers let off during the consolidation phase that followed this rally, but demand returned in the second half of the year, helping fuel the run beyond $100,000.

The Bitcoin market downturn this year again accompanied a decline in the supply of the First Buyers, this time to a much stronger degree than last year’s drawdown. New capital inflows seem to have made a sharp return once more, however, as the metric’s value has switched to rapid growth, potentially explaining the rally to the new all-time high.

BTC Price

At the time of writing, Bitcoin is trading around $109,800, up over 4% in the past week.

Bitcoin Price Chart — The trend in the BTC price during the past month | Source: BTCUSDT on TradingView

Featured image from Dall-E, Glassnode.com, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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