On-chain data shows the Bitcoin “accumulation addresses” have observed all-time high inflows following the latest asset price slump.
Bitcoin Accumulation Addresses Have Aggressively Bought The Dip
As an analyst in a CryptoQuant Quicktake post pointed out, the total Bitcoin inflows going towards the accumulation addresses have set a new all-time high recently.
The “accumulation addresses” here refer to wallets that have only a history of receiving transactions and never of sending. This means that these addresses have only purchased coins and have never participated in any selling.
Besides this definition, fewer other restrictions exist for an address to be considered a part of this group. The wallet should have received at least two transfers (as only one transaction wouldn’t be enough to set the trend one way or another), and its balance should be greater than 10 BTC.
Even if they satisfy these conditions, miners and exchange-associated wallets are still excluded from the group, as they inherently compensate for the sell-side of cryptocurrency.
The accumulation addresses are naturally the opposite of these entities, as these HODLers buy coins and lock them up in their relentless hands, thus effectively removing them from the circulating supply.
There is also one final condition for an address to fall in this category: it must have seen its most recent transfer within the last seven years. Wallets older than this are thought to be lost because of missing keys or just being forgotten, so they don’t exactly represent the voluntary HODLers of the market.
Now, here is a chart that shows the trend in the Bitcoin inflows going toward these accumulation addresses over the past year:
The value of the metric appears to have been quite high in recent days | Source: CryptoQuant
As the above graph shows, Bitcoin inflows to accumulation addresses have recently achieved a new record. In this spike, 27,700 BTC ($1.75 billion at the current exchange rate) have flowed into the wallets of these perennial HODLers in a single day.
The indicator’s previous all-time high was witnessed a couple of months ago when the accumulation addresses purchased 25,100 BTC (almost $1.6 billion).
The chart shows that this buying spree occurred during the rally, eventually resulting in BTC touching new highs. As such, the latest strong accumulation from these diamond hands may also be bullish for the asset’s price.
The chart also shows that the frequency and scale of large purchases from this cohort have been quite extraordinary in recent months.
This trend could be explained by the bullish environment following the approval of spot exchange-traded funds (ETFs) and their buying.
BTC Price
Bitcoin briefly slipped below the $60,000 level during the past 24 hours, but the asset has since rebounded back towards $63,500.
Looks like the price of the coin has continued to be stuck in a range recently | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, CryptoQuant.com, chart from TradingView.com
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Author: Keshav Verma
