Bitcoin Bear markets are almost always viewed in a negative light. Net worth evaporates and recent investors in the world’s largest cryptocurrency by market capitalization often find themselves in the red on their initial investments.
But the bear market of 2022 has been bullish for a particular group of investors. That is, a group of retail-sized crypto believers will want to get their hands on at least one. B T c token.
According to data presented by crypto analytics firm Glassnode, there were a little over 800,000 Bitcoin Wallet with a balance of at least 1 BTC Bitcoin Reached its all-time high of $69,000 in November 2021.
FTX collapse accelerates trend toward self-custody, high confidence retail investors buy the dip
Despite aggressive price drops during the last 15 or so months, that number has grown to over 980,000. A big part of that boom came after the untimely collapse of one of the world’s largest cryptocurrency exchanges, FTX, which resulted in customers losing access to billions worth of crypto deposits.
The collapse of FTX dealt a severe blow to the confidence of crypto investors to store their assets in centralized entities, hence the rapid shift towards crypto self-custody. The number of BTC held by exchanges currently stands at around 2.275 million, down from 2.53 million prior to the FTX withdrawal halving.
But the FTX collapse only served to accelerate a trend that was already underway. High-confidence retail investors have clearly used the 2022 bear market as an opportunity to own at least 1 BTC for the first time. In other words, this group of investors is also clearly buying the dip. And if the current pace of growth in the number of wallets containing at least 1 BTC continues, it is likely to reach the 1 million mark within a few months.
How can this affect the BTC price?
2022 shows that an increase in the number of bitcoin wallets with a balance of at least 1 BTC will not necessarily coincide with an increase in the price of BTC. In fact, recent history suggests that the number of wallets containing at least 1 BTC is likely to reach one million if the bitcoin price falls from current levels in the $20Ks, rather than continuing to grind higher.
This is because, since the sharp jump in bitcoin prices from the beginning of the year, the number of wallets holding 1 BTC has largely stagnated. Clearly, investors in this cohort have been tempted to issue (some of) their coins to newcomers in exchange for a market correction. Indeed, the number of wallet addresses with non-zero balances reached a new record high of over 44.2 million in mid-February.
The continued temptation by this cohort to issue coins to smaller wallets as the BTC price rises can be interpreted as bearish or at least a headwind for the price. But considering that the group of investors holding at least 1 BTC is dominated by investors with a “HODLer” mindset, this may not be a bad thing for the price of bitcoin.
This is because, according to Glassnode’s popular Realized HODL (rHODL) ratio indicator, when HODLers start releasing coins after a long period of accumulation following a bear market, it can often be taken as a bullish sign. Could Glassnode’s RHODL multiplier takes the ratio between the actual market capitalization of coins that moved in the past week versus 1-2 years ago.
The RHODL ratio is in the process of moving lower after hitting an all-time low, which has been consistent with bear market bottoms in the past.
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