Bitcoin accumulation trend score reveals the behavior of individuals

The accumulation trend score is used to determine whether entities are actively accumulating coins. It is a better indicator of the overall market sentiment towards buying and selling, as one can apply it to any cohort to determine the behavior of any particular group.

The indicator contains two metrics - an entity's participation score and balance change score. The balance change score represents the number of new coins bought or sold over a month, while the participation score represents its overall coin balance.

An accumulation trend score closer to 1 shows that the largest part of the network is accumulating, while a score closer to 0 shows that the network is mainly distributing its coins.

The accumulation trend score provides a great insight into market participants' behavior over a month, when applied toBitcoin. Exchanges and miners are excluded from the metric in order to make the data more representative of market conditions.

The accumulation trend score for the digital currency from April 2020 to August 2022 shows four distinct accumulation periods. The accumulation periods occurred in March 2020, early 2021, early 2022 and late May 2022, and were highlighted as green on the chart above. In March 2020, the most significant accumulation rate was seen as the onset of the COVID-19 epidemic. The major sell-off we saw in the wake of the Terra LUNA crash in late May and early July triggered a major accumulation spree.

During periods of coin distribution, highlighted in red and yellow, all periods of accumulation followed by periods of coin distribution. Some of the highest rates of coin distribution were seen during the exodus of miners from China in the summer of 2021 and the beginning of Russia's invasion of Ukraine in February 2022. The summer has seen many addresses sell their BTC as macro uncertainty pushes more investors to de-risk their portfolios.

The behaviors of two major groups on the Bitcoin network - whales and shrimps are revealed by breaking down the accumulation trend score by cohorts. Whales are addresses with more than 1,000 BTC, while shrimps are addresses with less than 1 BTC.

Throughout July, both whales and shrimps have been aggressively accumulating BTC. The chart shows the rate of accumulation by cohorts, with whales, shrimp, and everyone in between accumulating for the entire month.

As August progresses, the rate of accumulation among whales is beginning to decrease. Many large holders have been forced to sell their BTC holdings because of the uncertainty surrounding the economy. Many investors are expecting a hard winter and are hoping to get as much liquidity as possible.

Even when the majority of large holders started selling off, the only entities still stacking BTC are shrimps. July was the most significant accumulation month for small holders since 2018, with shrimp increasing their balance by over 60,000 BTC in a single month. The second-largest accumulation was in December 2017 when shrimp accumulated 52,000 BTC in a month.

Small holders view the price of around $20,000 as attractive and continue to acquire coins for long-term investment even if its price remains flat.