Investor Sentiment Weakens as Bitcoin Enters Distribution Phase, Reports Glassnode

Bitcoin (BTC) is currently navigating a distribution phase characterized by declining demand, as noted in Glassnode's latest report.

This trend, along with escalating investor uncertainty, contributes to the overall decline in market sentiment.

Bitcoin Enters Extended Distribution Phase

According to Glassnode's recent newsletter, Bitcoin has transitioned into a post-all-time-high (ATH) distribution phase, which reflects the cryptocurrency's cyclical nature.

The current cycle is marked by alternating periods of accumulation and distribution, wherein capital flows among various investor groups.

“The latest distribution phase began in January 2025, coinciding with Bitcoin’s steep drop from $108,000 to $93,000,” according to the newsletter.

Glassnode also pointed out that the Accumulation Trend Score has fallen below 0.1, indicating that market participants are now more inclined to sell their holdings rather than expand their positions. This ongoing trend may subject the market to further downturns.

The distribution is not exclusive to any specific group of investors. All categories of wallet sizes have been observed to actively distribute in recent months, enhancing the selling pressure within the market. This selling trend has notably gained intensity since mid-January.

A significant portion of the downward pressure originates from coins being sold at losses, further diminishing the market's strength.

“This highlights that the current market downturn presents a tough landscape for investors, many of whom are leaving the market at a loss,” noted Glassnode.

Investor sentiment has evolved to be more cautious during this period of distribution. According to Glassnode, accumulation rates have fallen in response to macroeconomic challenges, particularly due to incidents like the Bybit hack and escalating US tariff tensions.

Previously, during price corrections between mid-December and February, market participants were actively acquiring Bitcoin, especially within the $95,000 to $98,000 range, anticipating a sustained bullish trend.

However, by late February, tightening liquidity and heightened external risks caused a downturn in confidence regarding further accumulation.

“The absence of dip-buying at lower price levels indicates possible capital rotation, suggesting a prolonged consolidation phase or correction before establishing a strong support level,” Glassnode asserted.

Despite overall bearish sentiment, some analysts are seeing a brighter outlook. On-chain analyst Axel Adler has suggested that the substantial distribution by long-term holders may be coming to an end.

His analysis indicates a shift from heightened selling activity to diminished levels of accumulation, hinting that long-term holders are regaining confidence, which could usher in a stabilization or upward trend in the market.

“This decrease in supply often signals stabilization and the onset of a new market cycle, which could bode well for future price movements,” he remarked on X.

As Bitcoin navigates this distribution phase, it has experienced notable price fluctuations. Reports indicate that BTC dropped below $80,000 amid recession fears, but made a slight recovery as tariff and geopolitical concerns eased.

At the time of writing, BTC was trading at $83,424, reflecting modest gains of 2.0% over the past day, according to market data.