“Buckets Of Addresses” Accumulating Bitcoin Suggests Rally Past $50K Is Sustainable

Reynaldo Marquez

1 year ago

3 mins read

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Bitcoin broke the $50,000 mark for the first time this weekend. The first cryptocurrency by market cap saw a pullback and now trades at $49,554 with a 2.2% and 5.4% profit in the daily charts, respectively.

Bitcoin BTC BTCUSD — BTC dropped in the daily chart. Source: BTCUSD Tradingview

The general sentiment in the market has flipped bullish, but many investors still wonder if Bitcoin will be able to sustain its gains or if the recent price action will end up operating as a “bull trap”.

At the time of writing, indicators seemed neutral with analyst first Santiment recording an increase in the total BTC supply on exchanges. This fresh inflow came after the price of Bitcoin rose above $50,000, as trader Ali Martinez noted.

Thus, it seems logical to assumed that some holders have decided to take profits on the recent rally. Thus, the high selling pressure has pushed Bitcoin back to the high $40,000s.

Additional data provided by Ecoinometrics also recorded a rise in the number of addresses accumulating Bitcoin, as the price approach $50,000. As seen below, this suggests that more investors could be interested in buying Bitcoin at its current levels.

Thus, the rally could be more sustainable than in the previous occasions when the price tried to reclaim all-time high levels, only to be rejected back to yearly lows.

In support of the bulls, analyst William Clemente indicated that the Stablecoin Supply Ratio (SSR) has begun to trend upwards. This metric is usually used to measure demand volumes in the crypto market, as many investors rely on stablecoins to purchase Bitcoin and other cryptocurrencies.

Stablecoins starting to flow back into the market. pic.twitter.com/qopR7NbITx

— Will (@WClementeIII) August 23, 2021

As the chart shows, when the SSR started to descend in January 2021, BTC’s price followed after a period of sideways movement. Although the metric is on the rise, its effects could be felt in the medium term.

Long Term Bitcoin Holders Take Profit, What Could Prevent More Profits

A report published by Glassnode Insights confirmed that long-term holders (LTH) took profits on the rally. However, selling pressure seems low and bulls could continue their push.

Despite the increase in Bitcoin supply held on exchanges, the firm believes that the net flows across these platforms have “stalled”. As seen below, Bitcoin inflows on exchanges increased leading into May and June’s sell-offs but have plateau during July and August.

It is worth noting that the magnitude of inflow is not dissimilar to that seen through the Dec 2020 to April 2021 bull market period and is reasonably expected behavior.

Glassnode claims that, unlike previous cycles, BTC long-term holders are more active and can trade their coins with more frequency. In addition, they believe the selling pressure is being “absorb” by the market.

This suggests “sufficient” demand for these coins now entering a distribution phase. Younger holders seemed to be an important source of demand as the Realized Cap Hold metric “has been swelling throughout August”.

Despite that, the total supply held by long-term investors has reached an all-time high. Thus, Glassnode believes that indicators are suggesting bullish conviction:

The fact this trend has yet to slow down also demonstrates that significantly more coin volume is getting older, than younger. This adds further weight to the argument that the old hand spending observed this week is likely of low coin volume, and strategic de-risking, rather than a loss of conviction and a mass exit.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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