Investor sentiment is uncertain, but Bitcoin’s HODLing trends re-emerge during the market downturn

As the market navigates the biggest decline of this cycle, investor sentiment in the digital asset market remains uncertain.

Beneath the surface, however, Glassnode has found clear signs of a resurgence in HODLing and hoarding.

Signs of accumulation

Glassnode’s analysis of on-chain investors’ response to these volatile market conditions indicates a growing inclination towards HODLing. As the price of bitcoin reached an all-time high in March, the market experienced a prolonged phase of supply distribution with wallets of varying sizes.

In recent weeks, however, that trend has begun to reverse, particularly among larger portfolios, often linked to ETFs. This cohort of investors appears to be returning to an accumulation phase.

Accumulation of BTC. Source: Glassnode

Glassnode’s Accumulation Trend Score (ATS) metric, which assesses a market-wide weighted balance sheet shift, also suggests a shift to accumulation-focused behavior. This renewed focus on accumulation has seen the ATS reach its all-time high of 1.0, indicating substantial accumulation over the past month.

Long-term holders (LTH) had largely divested during the start of the all-time high. This cohort is back HODLing, with a total volume of +374k BTC migrating to the LTH state over the past three months. From this, Glassnode inferred that “investors’ propensity to hold their coins is now a greater force relative to their spending pressures.”

“We can see a substantial LTH spread, typical of macro topping formations, at the March ATH. Less than 1.7% of trading days have ever seen a larger spread pressure. More recently, this metric has returned to positive territory, indicating that the LTH cohort is expressing a preference to hold their coins.”

When do I bounce?

The active investor’s cost basis is a crucial threshold that helps determine whether investors feel bullish or bearish about the market. Since the market has remained stable around this point, Glassnode said it shows there is strength and investors still expect the market to improve in the near future.

Cumulative BTC Spot volume vs price. Source: Glassnode

The report also suggests that bitcoin’s failure to break the $70,000 mark may be partly due to a drop in current buying interest, i.e. a negative adjusted spot CVD. However, if buying interest improves and the adjusted spot CVD metric turns positive again, it could indicate a potential pick-up in demand.

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