Despite the sharp drop in the price of bitcoin last Tuesday, September 7, analytics firm Glassnode recorded an outflow of bitcoin (BTC) from major exchanges of USD 1.2 billion in that week. This confirms that bitcoin accumulation continued despite the sharp correction, analysts note.
In the Week On-Chain #37 market report, Glassnode analyzed the phase of intensive selling and high volatility in the week of September 6-12, in which the price went from an initial value of USD 52,849 to a local low of USD 44,196. After the 16.3% drop in the week, the price of BTC recorded a moderate recovery, to close last Sunday 12 at USD 45,235.
Prior to the publication of the report, Glassnode published on Twitter the net flows of bitcoin, ether (ETH) and tether (USDT), recorded last week on the exchanges. In the case of BTC, an inflow of USD 9.6 billion was noted, while the outflow was USD 10.8 billion. Consequently, despite the 16.3% drop in the price of BTC, there was a net outflow of USD 1.2 billion in bitcoin from the exchanges during that period.
Bitcoin derivatives markets precipitated price drop
Growth in highly leveraged futures contracts had been manifesting since the week of August 30 to September 5, as well as a boom in funding rates in both the bitcoin and ether (ETH) markets, notes Glassnode.
“Both markets saw a boost in selling on Tuesday the 7th, which deteriorated the price of BTC by more than 10,000 in an hour. Out of a peak USD 13.4 billion open interest in perpetual futures, USD 4 billion worth of contracts were closed and liquidated, 30% of the total,” the study remarked.
Despite the sharp correction, bitcoin accumulation has continued, specifically in the long-term holder segment. These are defined by Glassnode as those who hold their BTC for more than 155 days.
This means that those who acquired BTC before mid-April are considered long-term holders (LTH), and those who did so after the all-time high, recorded on April 14, fall into the short-term holder (STH) segment.
Glassnode notes that STHs have accumulated 16.8% of bitcoin supply over the past 5 months, or roughly about 3.16 million BTC. Those BTC were purchased in a price range between USD 29,000 and USD 40,000, according to the report.
In the case of LTH, these arrived at 79.5% of bitcoin supply, a level similar to October 2020, as Glassnode points out in the chart below.
<img src=”//www.w3.org/2000/svg’%20viewBox=’0%200%20701%20374’%3E%3C/svg%3E” alt=’acumulacion-bitcoin-caida-precios-mercado’ width =”701″ height=”374″ /> BTC accumulation did not stop during last week’s dramatic price drop. Source: Glassnode.
In the chart below, the report shows the growth of the supply held by LTH, reaching an all-time high of 12.97 million BTC, or 69% of the circulating supply.
The chart notes that previous accumulation periods, which occurred in bear markets, created supply shocks and consequently drove price spikes after accumulation peaked. Currently, the upward trend is evident, although the peak of accumulation has not yet occurred.
Glassnode highlights that the volume of BTC moving from the STH pool to LTH is growing at a rate of 421,000 BTC per month. This rate of accumulation can be expected to continue into the final quarter of the year, during which those who bought in the May to July period will convert to LTH, Glassnode argues.
This report by Glassnode partly coincides with an analysis by Coin Metrics on the reasons that would have caused the notorious drop in the price of BTC on Tuesday, September 7, which was commented on by CryptoNews last Saturday, September 11. It was highlighted there that an over-leveraged market and high levels of open interest in bitcoin futures could pose a systemic risk to the price.