#060 - How to Spot Bitcoin's Accumulation Phase (5 Telltale Signs)

How to Spot Bitcoin's Accumulation Phase (5 Telltale Signs)

Kierin here, and I've got a burning question for you:

Ever felt that sinking feeling in your gut when you realize you've missed out on a massive Bitcoin move?

I’ve been there, and it sucks.

But here's the thing — what if I told you there are a few ways to spot these opportunities before the rally continues?

That's exactly what I’ll be sharing with you today: 5 telltale signs to spot if Bitcoin is in an accumulation phase and how to trade it.

These metrics will drastically increase your probability of being right.

No more FOMO, no more missed opportunities — just smart, strategic moves based on data-driven insights.

Let's dive in!

My name is Kierin (Onchain Edge) I write weekly, data-driven insights for crypto investors. I will try my best to make sure you don’t f*ck this rally up. Join 800+ savvy investors.

BTC Onchain Edge Index (current value: 37 Medium Risk)

What's an Accumulation Phase, Anyway?

Before we jump in, let's break down two phases that are super important.

Most investors lose money because they do not understand this concept.

There are two important phases in the market:

• Accumulation phase: Smart money and whales tend to accumulate large amounts of an asset, i.e., Bitcoin

• Distribution phase: The Smart money and whales sell their assets at a profit to dumb money.

You do not want to be buying during the distribution phase.

Here are some of the characteristics of an accumulation phase:

• Price Movement: During the accumulation phase, the price of an asset, such as Bitcoin, typically moves sideways within a narrow range. On CT people typically call this extremely boring phase the crab market.

• Volume: Trading volumes are generally low, but may increase gradually as institutional investors start buying.

• Market Sentiment: Sentiment is usually neutral to slightly positive. You will notice that negative news doesn’t impact the market as much as it should.

Now, let's look at those 5 signs:

1. Price Stability and volatility

During an accumulation phase, you will notice that the 60D volatility drops to extremely low levels.

This means the price of Bitcoin doesn’t move a lot.

You can use the Bitcoin volatility chart (60D) on Coinglass to see the current volatility value.

You don’t really want to be accumulating during high-volatility phases.

The one caveat is that low volatility doesn’t necessarily mean the price will go up. A crash is also possible.

That’s why we need to look at a few more signs.

Platforms like Bybit offer great tools for this strategy.

2. Volume Speaks Louder Than Price (CVD)

The CVD is one of my favorite metrics to look at, as it can tell me a lot earlier when the market is primed for a breakout.

Detecting a Breakout to the Top

1. Rising CVD with Price Increase: This indicates that buying pressure is not only present but also increasing, supporting the price movement.

2. Divergence Analysis: If the price is moving sideways or slightly downwards while CVD is rising, it suggests that buying pressure is building up, potentially leading to a breakout.

3. Volume Confirmation: Confirm the breakout with volume. A significant increase in volume, along with a rising CVD and price, indicates a strong breakout.

3. Fake-outs

During the accumulation phase, fake breakouts are often noticed in the lower and upper market ranges.

As soon as you see the second failed breakout towards the upper level, you should start paying closer attention.

The third time is the charm

Ideally, you want to be buying at the lower range. The onchain edge index can definitely help with that.

4. Bitcoin to Stablecoin supply ratio

The stablecoin supply ratio is a valuable metric for understanding the dynamics between Bitcoin and stablecoins.

The SSR is a highly useful indicator that can provide insights into the end of an accumulation phase and the potential for a breakout.

​Understanding the SSR value

• High SSR: Indicates a low supply of stablecoins relative to Bitcoin's market cap. This suggests low potential buying pressure from stablecoins, which could lead to a price drop or stagnation.

• Low SSR: Indicates a high supply of stablecoins relative to Bitcoin's market cap. This suggests high potential buying pressure from stablecoins, which could support a price rise.

SSR Trend Reversal

A trend reversal in the SSR can signal the end of the accumulation phase. 

When the SSR starts to increase after a prolonged period of being low, it shows that stablecoins are being converted into Bitcoin.

For example, after the FTX meltdown, the SSR remained low, indicating high buying power from stablecoins, which eventually led to a 70% increase in Bitcoin's price in Q1 2023.

5. Long-term vs Short-term Holders: The Patient vs The Restless

I actually talked about the long-term and short-term holders in the last newsletter.

However, I think there is another excellent use case for the LTH/STH chart.

You can see the bottom and top of the range by looking at which prices long-term holders are accumulating and which prices short-term holders are buying.

I prefer to buy at the same prices as the patient long-term holders.

Wrapping Up

Remember, spotting an accumulation phase is more art than science.

It's like trying to time when to hit the buffet – you might not get it perfect, but these signs can help you make smarter decisions.

Here's a quick checklist to keep handy:

1. Is the price stable?

2. Is trading volume (CVD) up?

3. Are there failed breakouts?

4. Is everyone feeling gloomy about Bitcoin?

5. Is negative news not impacting the market anymore?

6. Is selling pressure decreasing?

7. What are the technical indicators saying? (onchain edge)

8. Is the Puell Multiple in the green zone?

9. Are long-term holders buying?

10. Are there strong support levels?

Stay sharp,

Also, remember that this isn't financial advice. Always do your research and never invest more than you can afford to lose.

If you want to support this newsletter, use one of these reference links for the tools I use: TradingView for charting and Bybit or Kraken for your trading.