Bitcoin (BTC) recorded an impressive rally after falling to its three-month low of $ 42,333 on December 4, hitting $ 51,000 since.
BTC price retracement has mainly surfaced due to increased buying activity among addresses that hold less than 1 BTC. In contrast, Bitcoin wallets with balances between 1,000 BTC and 10,000 BTC did little to support the bullish movement, data collected by Ecoinometrics showed.
“Bitcoin is still stuck in a situation where small addresses are ready to stack sats [the smallest unit of account of Bitcoin], while whale addresses don’t really pile up, ”the crypto-focused newsletter Noted after evaluating the evolution of Bitcoin amounts in the small and rich wallet groups, as shown in the graph below.
Ecoinometrics further claimed that the situation for Bitcoin is “not ideal”, suggesting that the price of BTC may end up resuming its decline in the absence of influential buyers.
Bitcoin’s downside target is near $ 42,000
The bearish outlook for Ecoinometrics emerged as Bitcoin grappled with the U.S. Federal Reserve’s policy decision on Wednesday to cut its bond purchases by $ 30 billion each month to unwind them entirely by April of. next year.
The $ 120 billion per month stimulus package helped push the price of BTC from less than $ 4,000 in March 2020 to $ 69,000 in November 2021. And now that liquidity threatens to wane, loans are becoming costlier as the Fed prepares for three rate hikes next year, many fear it could hurt investor appetites for risky assets like Bitcoin.
Bitcoin’s price briefly rose above $ 49,000 after the Fed’s FOMC meeting confirmed at least three interest rate hikes and some adjustments to current market support practices in 2022. https://t.co/TpTX7tGmYL pic.twitter.com/lXw47icZmB
– Cointelegraph Markets (@CointelegraphMT) December 15, 2021
Mike Novogratz, CEO of Galaxy Digital Holdings, admitted that Bitcoin could feel “pain ahead,” but predicts that its price will not exceed the $ 42,000 support.
“$ 42,000 is at a pretty high level, and the weak 40 should hold on,” crypto billionaire Recount Bloomberg TV in an interview on Tuesday, adding:
“So much money is pouring into space, it wouldn’t make sense for crypto prices to go well below that. If you’re long, it’s painful, but it’s probably healthy.
Stronger Bitcoin Accumulation at Retailers
In fact, single wallets holding 1,000 BTC or more declined in 2021, with data from Glassnode showing that their number fell to 2,147 from 2,475 since February 9.
In contrast, the number of unique wallets containing at least 0.01 BTC (around $ 485 at current exchange rates) increased in 2021, from 8.46 million to 9.39 million.
Meanwhile, addresses holding at least 0.1 BTC (~ 4,855) fell from 3.12 million to 3.30 million over the same period, indicating that “fish” played a key role in the process. pumping the price of Bitcoin from around $ 30,000 to $ 69,000 this year.
Another piece of evidence showing that retail investors have been bullish on Bitcoin comes from addresses that hold at least 1 BTC.
Related: Analysts Expect Bitcoin Trend Change After Fed Introduces 2022 Roadmap
The quantity of these wallets declined in the first half of 2021, as the BTC market struggled with the China ban and other negative news, but began to increase in the second half, as El Salvador adopted Bitcoin as legal tender.
The number of Bitcoin wallets with at least 1 BTC also continued to increase during the BTC price correction, from $ 69,000 to $ 42,333 during the November to December session, signaling a build-up. It hit a seven-month high on Wednesday just as Bitcoin rebounded to $ 50,000 from its weekly low of nearly $ 46,000.
Channel analyst Willy Woo also accumulation of detail spotted hitting levels seen after the March 2020 crash, which led to Bitcoin’s two-year bull run.
Additionally, Bitcoin’s momentum indicator that preceded its price break at $ 69,000 earlier this year also hints at a possible upcoming BTC price break.
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