The number of small Bitcoin ($BTC) wallets has reached 42.26 million, accounting for 77.4% of the 54.62 million non-empty wallets. Santiment data reveals this distribution showcases the increasing number of small retail traders in the Bitcoin market following an uptick. Supplies distribution analysis is utilized to see market trends and to forecast prices movements.
Small Traders Cut Holdings Before Bitcoin Price Surges
Supply distribution defines which investor groups assets are distributed to. Knowing the sizes of wallets makes it possible to evaluate whether larger investors are accumulating or selling Bitcoin. Moreover, this data is very useful for future price changes.
In historical terms, small traders (they have less than 0.01 BTC) hold the tendency to reduce holdings before price surges. Prior to Bitcoin’s rallies in June and October 2023, these wallets saw some big declines over the past two years. Too fast growth of small wallets typically indicates overheat of the market, often causing correction.
Crypto FOMO in 2024 Reflected Previous Market Trends and Patterns
Whale activity meanwhile is also relevant in Bitcoin price trends. Before price increases, wallets holding 100 or more BTC tend to stack. Bitcoin is purchased by these large investors when smaller traders sell, and the capital they use pushes the prices up. A drop in whale holdings could mean the whales are taking profit, which is not a pleasant situation for price.
Another key indicator is total number of holders on a network. Much of the supply lives in the wallets of small investors, and when those wallets consolidate, Bitcoin prices tend to rise. However, a fast rise of new wallets might indicate a future market cooldown. This echoed the crypto FOMO in March and April of 2024.
Lastly, as Bitcoin adoption increases, the importance of studying these patterns will be critical for market participants.
