Bitcoin Accumulation Addresses See Record Inflows as Correction Risk Looms: CryptoQuant

Bitcoin accumulation addresses are witnessing record inflows following Bitcoin’s (BTC) surge to its all-time high of $69,000 and the subsequent retracement.

According to a weekly report by CryptoQuant, daily inflows into Bitcoin accumulation addresses have risen to 38,000 BTC, pushing the total holdings of such wallets to record-high levels of 1.5 million BTC.

Bitcoin accumulation addresses only acquire BTC and never sell. CryptoQuant said the increase in their digital asset holdings indicates strong demand.

The rise in the holdings of Bitcoin accumulation addresses correlates with high demand from spot Bitcoin exchange-traded funds (ETFs), which has remained consistent over time. All the ETFs, except GBTC, had accumulated around 360,000 BTC at writing time, representing 1.8% of the asset’s total supply.

Analysts said the crypto market may be at the beginning of the part of the cycle where new investors buy from older ones at higher prices. This development can be seen in a decline in the Bitcoin supply that has not moved in more than a year, which is currently at 68%, down from 70.5% recorded in November 2023.

BTC Correction Risk Looms

While accumulation addresses and ETFs see record inflows, CryptoQuant reiterated its warning of a short-term price correction risk as BTC prices have increased too fast in relation to key on-chain indicators. One metric is the platform’s Bull-Bear Market Cycle Indicator, which flagged an overheated-bull phase as BTC surged past $65,000.

In addition, Bitcoin miners are currently extremely overpaid, as seen in the Miner Profit/Loss Sustainability metric. Mining revenues have been on the rise since December 2023 due to the increase in BTC valuation.

Short-term investors’ unrealized profit margins are currently above extreme levels, hovering at 57%, an uptick from last week’s 32%. Since a profit margin of 40% signals a price correction, analysts anticipate selling pressure from these traders soon. This metric can also indicate a price correction when it goes below its 30-day moving average.

Moreover, some short-term investors have already begun selling their assets to realize some profits. CryptoQuant’s analysis found that this cohort of market participants has been offloading their holdings over the last few days at high-profit margins not seen since February 2021, with an average of 11%. This activity can also trigger high selling pressure in the crypto market.

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