Decline in Bitcoin (BTC) Wallets Reflects Market Fear, But There’s A Catch
Bitcoin and the rest of the crypto market have recovered, wiping out most of the losses incurred during the recent correction.
Besides this latest recovery, the leading asset could see more positive returns in the near future, according to the latest data.
Bitcoin Non-Zero Wallet Addresses Drop
Santiment’s recent analysis of Bitcoin’s network activity revealed a notable decline in the number of total non-zero coin wallets over the past 10 days, with a net difference of -311K.
While this might concern novice traders, the blockchain intelligence platform said that, historically, such declines have coincided with moments of FUD in the market. During these periods, small BTC wallets capitulate while larger addresses accumulate more. Taking into account these past occurrences, during similar drops in active wallets, Bitcoin has demonstrated significant price surges.
For instance, from September 23rd to October 23rd, despite a decrease of 1.10 million non-zero wallets, BTC soared by 28%. Similarly, from January 21st to February 13th, with a decline of 757K non-zero wallets, BTC surged by 24%, Santiment observed.
Therefore, despite the recent decrease in non-zero wallets, history suggests that Bitcoin may soon rebound with positive returns as traders exit the market, believing the top has been reached.
“If history is any indication, Bitcoin has a strong chance of putting up positive returns before this exodus of non-0 wallets this round (due to traders thinking the top is in) finally stops.”
Renewed in Risk Appetite
Bitcoin saw a significant sell-off leading up to the correction that triggered a fall close to $62,000. While the crypto asset is still down nearly 10% from its recently established all-time high of $73,750, there’s a renewed risk appetite among investors, particularly after the Federal Open Market Committee (FOMC) meeting on March 20, as noted by QCP Capital.
Besides Bitcoin, altcoins such as Dogecoin, Solana, and Ethereum also recorded significant gains over the past 24 hours, with 13.35%, 9.09%, and 6.07%, respectively.
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