Bitcoin recently reached an all-time high of almost $70,000 before experiencing a retracement. Notably, there has been a rising trend in Bitcoin accumulation addresses, with record inflows reported in a weekly analysis by CryptoQuant, a blockchain analysis platform.
These addresses, known for only acquiring BTC and never selling, are witnessing a surge in daily inflows, pushing their total holdings to a whopping 1.5 million BTC.
Rising Demand and Strong Indicators
As per CryptoQuant, the surge in Bitcoin accumulation addresses aligns with a surge in demand from spot Bitcoin Exchange-Traded Funds (ETFs), except for GBTC. These ETFs have collectively amassed around 360,000 BTC, representing 1.8% of the total bitcoin supply.
This is being viewed as a potential indicator of a market cycle shift, with new investors entering the scene and purchasing from existing holders at higher prices. A crucial aspect supporting this theory is the decline in the percentage of bitcoin supply that has not moved in over a year. As of now, this figure stands at 68%, down from 70.5% in November 2023.
Bitcoin Accumulation: Warning Signs of Correction
While the influx into accumulation addresses and ETFs paints a bullish picture, CryptoQuant remains cautious, warning of a short-term correction risk.
The rapid increase in BTC prices has triggered concerns, particularly in relation to key on-chain indicators. The Bull-Bear Market Cycle Indicator, a metric on CryptoQuant’s platform, has signaled an overheated-bull phase as Bitcoin surpassed the $65,000 mark.
As reported earlier, popular Dutch analyst Michael Van de Poppe predicted that BTC is likely to experience a 30% price correction in the near future.
Mining Profitability and Investor Behavior
Bitcoin miners, who have enjoyed increased revenues since December 2023 due to the rising valuation of BTC, are now considered overpaid, according to the Miner Profit/Loss Sustainability metric. This presents a potential risk, as historically, such scenarios have preceded market corrections.
Another red flag is the unrealized profit margins of short-term investors, which are currently hovering at an alarming 57%. This uptick from last week’s 32% suggests that these investors are contemplating selling to lock in profits. A profit margin of 40% traditionally signals a potential price correction, adding to the concerns raised by the Bull-Bear Market Cycle Indicator.
Market Participants Taking Profits
Adding to the cautionary notes, CryptoQuant’s analysis reveals that some short-term investors have already started selling their assets to capitalize on the profits. These investors have started offloading holdings over the past few days, with profit margins not seen since February 2021. This heightened selling activity has the potential to trigger increased selling pressure in the broader digital assets market.
It is crucial to note here that while some analysts are predicting a short-term correction, renowned author Robert Kiyosaki reiterated that the leading digital asset could surge to $300,000 per coin by the end of 2024.
“BITCOIN on fire. The biggest mistake you can make is to procrastinate. Important to start, even if only for $500. Next stop is $300,000 per BTC in 2024,” said Kiyosaki.
Disclaimer: The information provided here is for informational purposes only and should not be considered as investment advice. Any investment decisions should be made after careful consideration of individual financial circumstances and consultation with a qualified financial advisor.
