• Bitcoin declined by 8.42% on the weekly charts, fueling a hike in bearish market sentiment
• Accumulation trend score nearing 0 could have implications for the cryptocurrency

Over the past few months, Bitcoin has seen some extreme volatility on the price charts. While 2024 has seen BTC hit a record high of $73k and greater market favourability since the launch of ETFs, it has also seen higher volatility.

At the time of writing, BTC was trading at $54,239 after an 8.42% decline over the past week.

And yet, it is still showing some signs of life with a recent hike in trading volume. In fact, figures for the same surged by 63.13% to $48.6 billion over the last 24 hours. What does this mean for BTC’s market outlook over the short and long term though? Can Bitcoin fully recover now?

Well, according to popular crypto analyst Ali Martinez’s suggestion, BTC may be seeing reduced participation. He made this assertion by citing the declining accumulation trend score.

Market sentiment analysis

According to Martinez, the accumulation trend score is nearing 0 right now. This means that market participants are either distributing or not accumulating BTC.

In context, the accumulation trend score reflects the relative size of entities that are actively accumulating coins on-chain in terms of BTC holdings. A value close to 1 suggests that participants are accumulating coins. A value closer to 0 indicates participants are distributing their holdings.

Thus, when the accumulation trend score flashes 0, it suggests no buyers from any cohort and implies distribution. Every time BTC hits a low in a bear cycle, it sees a hike in accumulation as investors buy the dip. However, after the bear market cycle persists, a lack of accumulation occurs as they lack confidence in the cycle.

Based on this analysis, the accumulation score is nearing 0 from the end of August to early September 2024. This means greater distribution and weakening accumulation among participants. Such a scenario suggests larger players and long-term holders are not buying – An indication of bearish sentiment.

This is also a sign of lack of confidence among investors over the near-term rally. These market conditions result in selling pressure, leading to a price decline on the charts.

What do the price charts say?

Now, while the metrics highlighted by Martinez provided a detailed outlook of the prevailing market sentiment, the broader market did bear the burnt of its recent recovery.

For starters, Bitcoin’s large holder SOPR has declined from 2.4 to 1.6 over the past 7 days. This showed that although long-term holders are selling at a profit, the scale of the profit is decreasing. Therefore, traders are selling at a loss as they are becoming less confident in the short-term to medium-term outlook for the asset.

This scenario also seemed to suggest that investors are pessimistic about future price hikes and they are preparing for a further bearish scenario.

Additionally, Bitcoin’s exchange netflows have remained relatively positive over the past 7 days. In 7 days, 4 days have seen positive exchange netflows – A sign that more investors are preparing to close their positions. Here, a hike in inflows into exchanges can result in distribution, if it leads to selling.

In light of all these factors, it can be predicted that if the selling pressure persists, BTC will risk declining below $50k.