Bitcoin has remained in a downward trend since hitting its all-time high of $126,000 in October, as investors continued to sell and exchange for stable assets and other alternatives.
However, selling pressure now appears to be easing, with accumulation gaining momentum. This shift strengthens the possibility of a price recovery in the coming months.
Will there be a new bull market?
The Bitcoin Sharpe Ratio, which measures the risk-adjusted return of investing in Bitcoin [BTC]suggests that a new bull market may be forming.
This assessment is based on the Sharpe Ratio reaching historic levels prior to the 2021 bull cycle.
If historical patterns repeat, like the last bull run that saw Bitcoin rise sharply, the leading cryptocurrency could have up to eight months of upside potential before entering a risk zone.
Source: CryptoQuant
The risk zone on the chart often marks the beginning of a broader bearish phase in the market.
That said, Bitcoin’s price could fall even further if it fails to maintain the current level that supported the last bull rally, potentially falling until it reaches the low-risk zone.
For now, investors continue to accumulate Bitcoin at current levels, with foreign exchange reserves dwindling to 2.7 million BTC.
This drop means fewer Bitcoins are available on exchanges, where assets can be more easily sold, and suggests investors are moving more assets into private wallets.
Accumulation Trends for ‘Wholecoiner’
Bitcoin ‘wholecoiner’ activity (defined as transactions involving more than one Bitcoin) at Binance has dropped significantly.
This reduction corresponds to the decline in foreign exchange reserves. Lower inflows on the stock exchanges usually indicate a reduced willingness of investors to sell.
Currently, whole coin inflows have dropped to an annual average of 6,500 BTC, the lowest level for such transactions in Binance. The weekly average is now around 5,200 BTC.
Source: CryptoQuant
While this decline highlights the reduced whole coin activity on Binance, several factors could also influence the trend, including the increasing use of multiple exchanges.
To get a broader picture of market behavior across platforms, Bitcoin netflow – used to assess whether investors are buying or selling – remains an important metric.
Netflow data shows that traders started the week bullish, recording net buying of $9.7 million. Last week’s total accumulation reached $1.39 billion, the highest level in nearly three weeks.
What long-term investors do
Examining the long-term behavior of Bitcoin holders provides deeper insight into whether the accumulation is actually happening.
Long-term holders (LTHs) are investors who have held Bitcoin for extended periods, typically more than 155 days, without moving their assets.
Each trade from this group often signals a shift in sentiment, whether bullish or bearish.
Source: CryptoQuant
Bitcoin Binary Coin Days Destroyed (CDD) has dropped to zero on the chart, indicating that these long-term holders are not moving their Bitcoin.
As long as the CDD remains at zero, selling pressure from this cohort should remain minimal, reinforcing the view that accumulation is underway and the broader rally structure remains intact.
Final thoughts
- Bitcoin accumulation resumes, with the potential for a rally that could last up to eight months.
- Binance trades involving 1 BTC or more have decreased significantly, indicating reduced selling pressure.