Markets
Is the consolidation phase over? Crypto Market Is About to Move North (Bitfinex)
Bitfinex analysts have identified on-chain dynamics that suggest the correction phase of the crypto market has ended and investors have entered a reaccumulation phase, which precedes rallies.
According to the latest Bitfinex Alpha report, crypto investors are buying Bitcoin (BTC) and Ether (ETH) at an increasingly steady rate. The market’s shift from consolidation to reaccumulation is evident in the behavior of BTC exchange-traded funds (ETFs) and the average transaction size on Bitcoin and Ethereum.
The consolidation phase is over
After bitcoin hit its all-time high of $73,700 in mid-March, long-term holders began selling their reserves for profits. These moves led to an increase in the supply of BTC on the open market and a period of price correction that saw the cryptocurrency autumn as low as $57,500.
During the consolidation period, which lasted several weeks starting in April, Bitcoin ETFs experienced significant outflows, averaging $148 million per day. Analysts said these capital outflows marked a form of micro-capitulation period; however, they quickly reversed themselves.
With BTC sellers getting exhausted, purchases increased. U.S. spot Bitcoin ETFs have seen a resurgence in demand from the buy side, with daily net inflows averaging $136 million over the past two weeks. Although Grayscale’s GBTC saw significant outflows, the funds saw a 15-day inflow. streakbuying more than four times the daily supply of Bitcoin miners.
BTC FX Reserves Dive
Crypto investors’ pivot toward reaccumulation is also seen in the increase in new accumulation addresses and the average transaction size of Bitcoin and Ethereum.
“Looking at the accumulation addresses on the Bitcoin and Ethereum networks, we see that, despite the recent price stability and modest growth of both assets, compared to previous months, there has been a notable increase in new addresses of “accumulation over the past month,” Bitfinex said.
Analysts at the exchange explained that the trend indicates that investor sentiment remains optimistic despite stable crypto asset prices. Additionally, the stability of the leverage ratio estimated on these networks highlights a balanced market with minimal tail risks.
In the meantime, there was a decrease in the Bitcoin exchange reserve, which tracks the amount of BTC held in exchange wallets. Crypto analysts consider a fall in this metric bullish because it reduces the available supply of BTC, while a rise indicates more of the asset is available for sale. The decline began in February and has intensified recently as investors expect prices to rise further.