Bitcoin: Why a declining number of wallets can’t stop BTC’s rebound

Declining Bitcoin addresses indicated a potential market rebound, following historical recovery patterns.
Strong institutional interest and ETF inflows supported the market, with whale acquisitions surpassing 2021 totals.

As a seasoned crypto investor with several years of experience under my belt, I have witnessed numerous market fluctuations and trends that shaped the crypto landscape. The recent decline in Bitcoin wallet addresses, as reported by Santiment, might seem alarming at first glance. However, based on historical patterns, this trend could indicate a potential market rebound.

Based on recent data from Santiment, the count of Bitcoin [BTC] wallets containing the cryptocurrency has seen a notable reduction over the last month.

The decrease of 672,510 addresses occurred concurrently with Bitcoin’s price fall from its high above $70,000 in early June.

Although Bitcoin’s price has bounced back above $65,000 following a recent recovery, the count of wallet addresses hasn’t yet displayed a notable uptick.

Although the decrease in wallet addresses may raise some concerns, past trends indicate a possible market recovery.

Based on Santiment’s analysis, an uptick in the number of Bitcoin holders tends to occur after the cryptocurrency market recovers, with a lag time of around several weeks.

Santiment reported,

“When we see mass liquidations like this, the probability of a continued rebound only increases.”

The downward trend in the number of wallets holding Bitcoin over time, as seen historically, may pave the way for a potential future rebound.

Bitcoin ETF inflows rise

In the past nine days, there’s been a steady increase in investments into Bitcoin spot ETFs, with a total inflow of $53.3475 million on July 17th. Despite a drop in the number of wallet addresses holding Bitcoin, these ETFs have continued to attract investors.

As an analyst, I’ve observed significant investments in Bitcoin-related exchange-traded funds (ETFs) recently. Specifically, BlackRock’s Bitcoin iShares ETF (IBIT) experienced a notable influx of approximately $110 million, while Fidelity’s Bitcoin Advantage ETF (FBTC) attracted around $2.83 million in new assets.

On the contrary, there was a net inflow of funds amounting to $7.09 million for the Bitcoin Trust by Grayscale, whereas GBTC experienced a significant net outflow of approximately $53.86 million on the same day.

For the past three months, the trading volume on centralized cryptocurrency exchanges has decreased noticeably. In contrast, Bitcoin’s spot markets have exhibited a positive trend, recording a growth of more than 10% over the last week.

At the time of writing, Bitcoin’s price traded at $64,800.

Furthermore, there has been significant growth in institutional ownership of Bitcoin. In 2021, large Bitcoin holders, which include exchange-traded funds (ETFs) and custodial wallets, have amassed around 1.45 million BTC – around 9% of the total supply.

As an analyst, I’ve observed that these whale entities have experienced a remarkable surge in weekly Bitcoin inflows, exceeding the entire annual intake of 2021, which amounted to approximately 100,000 BTC per week.

Supply in profit declines

At the current moment, approximately 89.43% of all available Bitcoins are generating a profit based on their purchase price and current market value, as indicated by Glassnode. However, other relevant indicators convey a more encouraging perspective.

Read Bitcoin’s [BTC] Price Prediction 2024-25

Ki Young Ju, the founder of CryptoQuant, pointed out that over-the-counter (OTC) trading platforms were surpassing the transaction volume on centralized exchanges. This observation suggests that institutions continue to amass cryptocurrencies.

The combination of this trend and the reduction in wallet addresses could be an indicator of an upcoming market recovery.

2024-07-19 07:04

Bitcoin ETF inflows rise

Supply in profit declines

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