Since hitting an all-time high above $69K, Bitcoin has seen a drastic drop that has sent it struggling below $50,000. On December 4, BTC dropped to its three-month low of $42,333 rising fears that the coin could drop below $40K.
Addresses with less than 1BTC responsible for the current BTC price
Data obtained by crypto-focused newsletter Ecoinometrics after evaluating the change in Bitcoin amounts across small and rich wallet groups shows that the bounce back from $42K to the current price is being attributed to the increased buying activity among the addresses holding less than 1BTC. The addresses holding 1000BTC to 10,000BTC are said to have done very little in supporting the upside move and no wonder the bull force is not sufficient to hold the coin above $50K.
“Bitcoin is still stuck in a situation where small addresses are willing to stack sats [the smallest unit account of Bitcoin], while the whale addresses aren’t really accumulating.”
Ecoinometrics further stated that the current value of Bitcoin is “not ideal,” and it could resume the decline due to the absence of influential buyers.
Ecoinometrics’ bearish outlook came after Federal Reserve issued its policy decision on Wednesday that caused the majority of cryptocurrencies including Bitcoin to rise slightly before turning to red shortly after.
According to the chief executive officer of Galaxy Digital Holdings Mike Novogratz:
“$42,000 is at a pretty important level, and low 40s should hold… So much money is pouring into the space, it would make no sense that the crypto prices would go much below that. If you’re long, it feels painful, but it’s probably healthy.”
Retail BTC accumulation stronger than whales
Bitcoin wallets holding more than 1,000BTC have been on the decline in 2021. Data from Glassnode showed that the number of wallets dropped from 2,475 to 2,147 since February 9 to date.
In the contrast, the number of wallets holding less than 1BTC has risen sharply. For example, addresses holding at least 0.01BTC have risen from 8.46 million wallets to 9.39 wallets while those holding at least 0.1BTC have risen from 3.12 million wallets to 3.30 million wallets.