The world’s largest cryptocurrency Bitcoin has been facing strong selling pressure with the BTC price dropping under $40,000 earlier this week. Amid the current selling pressure, small Bitcoin wallets have seen major liquidation taking place.
Accelerated Decline in Total Bitcoin Wallets
On-chain data provider Santiment has reported a noteworthy decline in the total number of Bitcoin wallets, marking the swiftest rate since early October – just before the commencement of the major crypto bull cycle. This trend is indicative of a similar level of impatience among investors. Over the last four days alone, more than 487,000 wallets, each holding 1 BTC or less, have been liquidated.
Historical patterns suggest that such rapid declines in wallet numbers are often associated with capitulation, a phase that could precede a market price bounce. This trend tends to persist until smaller traders regain optimism toward crypto as a viable investment vehicle.
The recent disappointment in market performances, following the approval of 11 ETFs over the past two weeks, is considered a significant factor contributing to the liquidation of wallets. Santiment suggests that these developments may signal a potential shift in sentiment among smaller traders, with the market poised for potential adjustments.
What’s Ahead for Bitcoin?
Investors have been watching the Bitcoin price movements keenly in anticipation of what’s coming next. At press time, BTC is trading 0.73% up at a price of $40,104 with a market cap of $786 billion. Analysts, however, warn that there is every possibility of a further slide downwards with the BTC price likely to tank another 15-20%.
In a recent assessment, crypto analyst Ali Martinez raises a cautionary note, stating that if Bitcoin’s price drops below $38,130, short-term BTC holders may face losses. This potential dip in Bitcoin’s value could instigate a new wave of panic selling, as holders seek to minimize potential losses in the short term. Martinez’s analysis serves as a signal to the crypto community, highlighting the importance of monitoring Bitcoin’s price movements and preparing for potential market reactions.
Courtesy: Ali Martinez
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