Recent data from strong investors dominating the market raises concerns. There is a serious problem in the cryptocurrency markets. In fact, the term angling fits exactly this event, small fish may have been lured by whales. We consider the current situation in the light of current data.
Why Isn’t Bitcoin (BTC) Rising?
A great answer to this has been found in light of recent data. The number of Bitcoin addresses holding less than 1 BTC is increasing with the correction from $69,000. Bitcoin (BTC) has made an impressive recovery after falling to a three-month low of $42,333 on December 4 and has since climbed as high as $51,000.
The BTC price pullback occurred primarily due to increased buying activity among addresses holding less than 1 BTC. In contrast, data collected by Ecoinometrics revealed that Bitcoin wallets with balances between 1,000 BTC and 10,000 BTC did not play much of a role in supporting the upward move. That is, while the fish are buying, the whales are selling and are not inclined to buy.
Bitcoin (BTC) Could Drop More!
Ecoinometrics also argued that the situation for Bitcoin is “not ideal,” suggesting that in the absence of influential buyers, the BTC price could continue to decline. Ecoinometrics’ bearish outlook becomes clearer with Bitcoin’s decision on Wednesday to reduce the Federal Reserve’s policy of cutting $30 billion each month to completely loosen bond purchases by April next year.
The $120 billion per month incentive program was instrumental in sending the BTC price from under $4,000 in March 2020 to $69,000 in November 2021. And now liquidity is running low. Loans will become more costly as the Fed prepares for the next three rate hikes Many fear this will hurt investors’ appetite for risky assets like Bitcoin.
Galaxy Digital Holdings CEO Mike Novogratz hinted that Bitcoin could suffer huge losses in the near future. But for now, Mike hopes his 42,000 sites will be preserved.
“So much money is flowing into this space that it doesn’t make sense for crypto prices to go far below that.”
In reality, unique wallets holding equal to or more than 1,000 BTC are dropping throughout 2021, and data from Glassnode shows they have dropped from 2,475 to 2,147 since Feb.
In contrast, the number of unique wallets holding at least 0.01 BTC (around $485 at current exchange rates) rose from 8.46 million to 9.39 million in 2021. The amount of these wallets dwindled in the first half of 2021 as the BTC market grappled with the Chinese ban and other negative news, but started to increase in the second half as El Salvador accepted Bitcoin as legal tender.
The number of Bitcoin wallets holding at least 1 BTC continued to rise during the BTC price correction, with a drop from $69,000 in the November-December period. That is, the “fishes” continue to accumulate, while the “whales” take a selling position.