Recent on-chain data indicates that Bitcoin may be entering two separate key stages in the current market cycle, which could shape the next trajectory of crypto asset prices in the coming weeks. It may help you decide.
Stages of Bitcoin accumulation and distribution are identified
The flow of Bitcoin capital on the blockchain reveals areas of accumulation and distribution, and as Alphactal, an advanced investment data platform, reported in a recent post on the X (formerly Twitter) platform, investment Provides insight into home behavior.
It is worth noting that during the accumulation phase, whales and long-term investors tend to increase their Bitcoin holdings. This is characterized by high activity and an expression of confidence in future asset price increases. Meanwhile, in the distribution stage, these holders sell some of their holdings, most of which lead to market corrections and increased market volatility.
The platform created its predictions after studying Bitcoin’s on-chain CapFlow Sentiment Index indicator. This key indicator uses a combination of momentum and stochastic indicators, along with a number of on-chain oscillators, to evaluate the realized capitalization of BTC.
On-chain data showing the two stages of Bitcoin | Source: AlphaRactal on X
According to the platform, this indicator is reliable in pinpointing areas in the network where coin flow begins to slow down and lose momentum, reflecting smart hand distribution. Alfaractal argues that this particular development also occurs during an accumulation phase that corresponds to a local bottom.
The platform also pointed out that even after the 2024 circulation period, Bitcoin has yet to reach a new all-time high. However, something similar to what happened in 2017, where three phases were mentioned, could happen again.
As a result, Alphactal emphasized the importance of paying attention to indicators and assessing whether new demand is developing. Because the opposite development could indicate a decline in the indicator and cause a decline in the BTC price.
Will BTC regain its lost momentum?
Several positive developments in Bitcoin’s on-chain activity and metrics could allow the crypto asset to regain its previous upward momentum, with BTC surging from $59,000 levels to nearly $70,000 last week.
BTC rose to around $68,693 late Thursday. However, as of today, the crypto asset has fallen below $67,500. While this move may have caused some concern, Bitcoin has shown resilience and remains firm at the $67,300 support level.
This temporary decline could be due to the absence of bulls, as identified by the decline in trading volume, which has declined by more than 11% over the past day. If the bulls regain control of the market, BTC could accumulate enough strength for a price recovery, and one of the next key areas to watch is the $70,000 level.
BTC trading at $64,634 on 1D chart | Source: BTCUSDT on Tradingview.com
Featured image from Unsplash, chart from Tradingview.com
