On-chain Data Shows Growing Interest in Crypto as Bitcoin Price Falls to $29.5K

The price of Bitcoin (BTC) dropped below the $30,000 level on July 18, something that may have come as a surprise to retail investors considering the events of the last month. Does this downside move signify a change in the trend?

Data suggests that it does not, at least in the long run. On the upside, Bitcoin price is still trying to reclaim the $30,000 level after 10 attempts since April, and buyers seem to be viewing the $28,000 to $25,000 range as an accumulation zone.

On-chain Data from Glassnode’s Bitcoin Accumulation Trend Score

Glassnode’s Bitcoin Accumulation Trend Score provides evidence to support this sentiment, and could be seen as a positive development, depending on how investors interpret it. The behavior of investors at the $30,000 BTC price is similar to the accumulation behavior observed in the $28,000 to $24,000 zone and near the supposed $16,800 bottom.

According to Glassnode, “an Accumulation Trend Score of closer to 1 indicates that on aggregate, larger entities (or a big part of the network) are accumulating, and a value closer to 0 indicates they are distributing or not accumulating.”

It appears that buyers were heavy accumulators of Bitcoin from November to December, from March to April when BTC recaptured $30,000, and now in July as BTC attempts to break the $30,000 resistance or benefit from the news on ETFs and XRP from the SEC.

Bitcoin is in a crab market

The present price movement and derivatives market data suggest that Bitcoin is in a crab market, where the value remains in a range and consolidates for a long period of time. As JLabs analyst JJ the Janitor noted last week, a forceful break through the $32,000 level could start a CME gap fill from the Luna Terra-crash era.

From the viewpoint of Bitcoin’s weekly market structure, the $30,000 level is an important pivot point that has functioned as support in the previous bull market cycle (and now as resistance) but a move above that level would essentially form a higher high on the longer time frame and be confirmation of a trend reversal where the next point of resistance is around the $37,000 level.

Traders’ activity in the derivatives market is another factor contributing to the current crab market. Funding is down, open interest is relatively low and besides retail plebs who are attempting to long breakouts and long lower support retests, or short breakouts and getting liquidated in both cases, a meaningful surge in these metrics that would inspire confidence that price is on the verge of some massive breakout has yet to emerge.

Sure, DXY took a dip below 100 last week, but it’s possibly more connected to investors reacting to the Fed’s positive steps on inflation and too tight of a timeframe to expect some massive reaction from crypto.com, Luna Crypto Today, Link Crypto, Muse Crypto, Kadena Crypto, On Crypto, Monavale Crypto, Newest Crypto, Maker Crypto, and Polymath Crypto immediately.

The price action in crypto exchange futures highlights degen longs and shorts trying to get ahead of price breakouts and that they are not having much success in the short term.

JJ the Janitor suggests that a metric to watch is aggregate open interest, if that breaks down sharply from the current range then some true buy the dip opportunities could emerge. Currently, it’s still in an uptrend, albeit sideways, but seeing a surge in OI could also be interesting and likely news, regulatory or legislative event driven.

While Bitcoin’s short-term price action might raise some concern among newer investors and day-traders, the on-chain perspective remains quite compelling.

At the same time, the Total Balance in Accumulation Addresses metric has also resumed its uptrend since March 16, when BTC price traded at $25,000.

Readers should also note that the metric also shows the total balance in accumulation addresses increasing since January 2022, when Bitcoin price was trading at $47,800 per coin. What is apparent is that through the worst of the crypto market collapse and Bitcoin price sell-off, multiple on-chain metrics show investors continuing to increase their allocation to crypto.com, Luna Crypto Today, Link Crypto, Muse Crypto, Kadena Crypto, On Crypto, Monavale Crypto, Newest Crypto, Maker Crypto, and Polymath Crypto.