The Pain Survey!

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Are we in state equilibrium, accumulation or a lull before the storm?

In this week’s Glassnode report, we dove into the Accumulation Trend Score and how it reflects the balance in the change in intensity of active investors over the past 30 days. In short, weights are assigned based on the size of the entities. A value of 1 indicates larger entities are adding, whereas a value of 0 indicates they are not adding.

Glassnode applied the values during the later stages of the 2018-2019 bear market, and determined the following.

  • Pre-Capitulation Equilibrium: While the spot price converges towards the long-lasting cycle baseline (dash line), the supply and demand sides remain in Equilibrium 🔲.
  • Capitulation: With price action breaking below the cycle baseline, the market enters a capitulation phase. Interestingly, the larger entities tend to intensify their Accumulation 🟢. These strong-accumulation intervals are usually followed by an Equilibrium 🔲 period.
  • Bottom Discovery: Throughout the bottom formation stage, due to the lack of demand, there are one or more incidents that a short-term rally is met with large entities Distribution 🔴 (known as Bear Market Rally).

What Glassnode found was that an equilibrium (neutral) structure has formed in a very similar way to the 2018-2019 bear market. This indicates a slower pace of accumulation below $24.5K vs. earlier in 2022 when capitulation occurred.

On top of that we can see the largest outflows since June 2022 as withdrawal increased by whales in recent weeks to 15.7k BTC.

Either margins are weighted on whales or inflation is because we are now seeing an increase in withdrawals by whales from their accounts to the tune of $17.5K bitcoins in Sept.

Diminishing supply is powerful tool to elevated financial stress, which is a reflection of seller exhaustion. According to Glassnode, 50% of the circulating supply is in an unrealized profit, while in prior bear markets it drifted as low 40%-42%.


To start off, I respect all of Glassnodes work; it’s extraordinary. When you review their work you can’t help but agree with most of their metrics. For example, the history of the percentage supply in profits has valuable insight in prior bear markets and we see numerous similarities in this bear market to previous cycle lows. Yet, one pronounced difference in this bear market is the fact that Bitcoin was coupled with equities at the end of the last bull market in late 2021. Subsequently, Bitcoin recently decoupled from equities and is now showing some relative strength as equities continue to flounder. As a result, Glassnode believes their metrics indicate a floor is being developed because of the similarities to previous cycle lows and other metrics they follow. I don’t totally agree here!

Let me explain! Glassnode does not subscribe to Elliott Wave. Nor do they incorporate relative strength into their work as religiously as I do. As a result, I believe they only see a piece of the puzzle even though their fundamental analysis is second to none. This is why I believe otherwise.

Anyway, in both prior bear markets we saw divergent RSI with a confirmed low followed by at least one divergent low.

Second, Equality is way down there.

Third, the most likely count off the All-Time-High (ATH) of $68,991.00 (note it’s an even number, no cents) is an ABC pattern.

If that ABC fails to manifest then the next most likely outcome is a 5 wave down. Frankly, with this flag on the monthly it is looking more and more likely.

Summing up the Quarter!

Though fundamental and technical analysis can give a picture of the future, the outcome of Bitcoin and other markets is not dependent on either here. We are all in the hands of the Fed and their policy to either let the free market decide or they will intervene and cause value destruction. In short, a close below $17,600.00 (note it is another even number, no cents) is worth watching because it opens up a back-test of the prior bear market lows at $3.1K.

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