Bitcoin Gearing Up for a ‘Powerful Bull Run’ as Smart Money Accumulation Concludes
Bitcoin (BTC), the leading cryptocurrency by market capitalization, is looking forward to a ‘strong bull run’ as the era of smart money accumulation wraps up.
Recent Developments and Market Performance
Bitcoin has been on the upward trend in recent weeks, surging to a high of $48,200 (August 14) before experiencing a correction. As of August 17, the cryptocurrency is trading at around $45,800, according to Coinmarketcap data.
The gradual uptrend has prompted a renewed bullish sentiment among market participants as memories of May’s crash slowly fade. Various on-chain metrics, technical analysis, and market sentiment suggest that the Bitcoin market is preparing for an explosive run in the near future. The accumulation phase, where investors and traders have been adding to their positions, seems to be over. The smart money, institutional investors, and long-term holders have started expressing their confidence by beginning to move their coins back into the market.
Smart Money Accumulation
The term ‘smart money’ refers to sophisticated, institutional investors and market insiders who typically have more access to information and a higher risk tolerance than the average investor. These participants have been accumulating bitcoin during the recent bear market in anticipation of a bull run, as indicated by various on-chain indicators such as exchange balances, long-term holder supply, and net position change.
Data from Glassnode shows that exchange balances have significantly decreased since May, with approximately 200,000 bitcoin ($9.17 billion) leaving exchanges in the past four months. This trend suggests that investors are moving their coins to long-term storage solutions, such as cold wallets or custody services, which could potentially reduce selling pressure in the market.
Long-term holders, as identified by on-chain analysts, are also accumulating bitcoin as the market consolidates. According to Glassnode data, the net position of long-term holders increased by more than 2,250 bitcoin ($102 million) from June 1 to August 2. As investors add to their positions, this metric reveals bullish sentiment and a firm belief in the long-term potential of the cryptocurrency.
Market Sentiment and Institutional Investment
Market sentiment is critical in determining future price movements, especially in a speculative market like cryptocurrency. Experts are increasingly optimistic about Bitcoin’s bullish outlook, as demonstrated by on-chain analyst Will Clemente’s recent analysis.
Clemente noted a drastic change in the net transfer volume of bitcoin from and to exchanges, with the most substantial net inflow in over a year on August 4. Although this usually signifies increased selling pressure, Clemente believes this is actually a bullish signal as exchanges typically sell coins quickly to reduce price volatility. Withdrawing large quantities of bitcoin from exchanges should help decrease selling pressure since it diminishes the liquidity available for trading.
Institutional demand for Bitcoin is also on the rise, as big players like PayPal, Goldman Sachs, and MicroStrategy have recently shown interest in the cryptocurrency. These developments reflect a broader push for mainstream adoption and serve as a bullish indicator for the market.
Technical Analysis and Market Predictions
From a technical perspective, Bitcoin’s recent breakthrough of the $42,000 resistance level — a critical psychological milestone that has stymied rallies since May — has sparked fresh interest among traders. The cryptocurrency must still break through a few more critical resistance zones to confirm the bull run, but so far, the trend is looking favorable.
As Bitcoin’s network continues to recover from China’s mining crackdown, the hash rate has also steadily increased, providing another bullish signal to investors. Additionally, the stock-to-flow model, a popular price prediction tool that asserts that prices are driven by bitcoin’s mining supply, corroborates the notion that the cryptocurrency is undervalued and poised for a bullish run.
In summary, a confluence of on-chain indicators and market sentiment suggests that Bitcoin is setting up for a strong bull run in the coming weeks and months. As the era of smart money accumulation comes to an end, investors can look forward to exciting times ahead. However, it is crucial to remember that the cryptocurrency market is highly speculative and volatile, and traders and investors should always remain cautious and practice proper risk management before entering a position.
