The number of wallets holding Bitcoin has been dropping at a rapid pace, with data suggesting that traders are capitulating over the belief that the price of the flagship cryptocurrency won’t surpass its all-time high of $73,500 seen in March.
According to data from on-chain analytics firm Santiment, the number wallets with a BTC balance has been “dropping aggressively,” with 672,510 less Bitcoin holders being registered now when compared to just a month ago.
Sentiment’s data seems to point to historical data showing that in the past, significant drops in the number of active wallets have often preceded significant price rebounds. This suggests that long-term investors view these periods of capitulation by smaller holders as buying opportunities.
Bitcoin is notably currently trading above the $67,000 after surging more than 17% over the past week, in a rally that started shortly after former U.S. President Donald Trump suffered a failed assassination attempt that boosted his perceived chances of getting elected.
Cryptocurrency prices likely rose as Trump has increasingly embraced the industry during his campaign, vowing to support it last month via his social media platform Truth Social.
As CryptoGlobe reported, a cryptocurrency analyst has recently suggested that the price of BTC could soon rise over an ongoing exchange exodus that has seen more than $7 billion move off of trading platforms just this month.
Historically, exchange outflows have been interpreted as a bullish signal. When investors transfer their Bitcoin to wallets they control the private keys to, it indicates a desire for greater control over their holdings, potentially reducing selling pressure. With less Bitcoin readily available on exchanges, scarcity could drive prices higher if demand remains constant or rises.
Beyond the withdrawal trend, another analyst pointed to the declining Realized Profit and Loss Ratio metric. This metric gauges market sentiment by analyzing profits and losses across the Bitcoin market. The current multi-month low suggests that investors who bought at highs have already cashed out, which potentially signals a market less likely to experience significant selling in the near future.
Featured image via Unsplash.
