The number of small Bitcoin wallets has reached 42.26 million, accounting for 77.4% of total active wallets. This metric becomes an important indicator for market dynamics analysis.
Small Traders' Activity and Market Impact
Analyzing supply distribution helps to understand how large and small investors distribute their assets. Small traders, owning less than 0.01 BTC, usually reduce their holdings before price surges. This was observed before the rallies in June and October 2023, with significant declines over the past two years. A rapid increase in the number of small wallets may indicate market overheating, often causing price corrections.
Impact of Large Investors on Bitcoin Price
Analysis of 'whale' activity is also essential for Bitcoin price trends. Large investors holding more than 100 BTC tend to accumulate assets before price increases. Bitcoin is purchased by these investors when smaller traders sell, and the capital used for purchases drives prices up. A drop in large investor holdings may indicate profit-taking, which is not favorable for prices.
Future Study of Market Patterns
The decrease in the total number of holders on a network can be a key indicator. When assets are concentrated in small investor wallets and these wallets consolidate, Bitcoin prices tend to rise. However, a rapid increase of new wallets might signal a future market cooldown. This echoed the crypto FOMO in March and April 2024.
As Bitcoin adoption increases, studying these patterns will be crucial for market participants.
