On-chain data shows that Bitcoin investors have been emptying their wallets lately as the assets continue to underwhelm in this post-ETF era.
Small Bitcoin wallets are showing signs of capitulation
This is evident from data from the on-chain analysis company Santimentthe number of small BTC wallets has fallen sharply in recent days. The relevance indicator here is the ‘Supply Distribution’, which tells us about the number of wallets that currently belong to the different holder groups on the Bitcoin network.
The addresses are divided into these groups based on the number of coins they currently have in their balance. For example, a wallet with 0.5 BTC would belong to the 0 to 1 BTC cohort.
Here is a graph showing the supply distribution trend for three different Bitcoin wallet groups over the past few months:
The trend in the wallets of the small, mid, and large BTC holders | Source: Santiment on X
The first portfolio group on the chart is the “0 to 1” coin cohort. The owners of such small pockets are usually the retail investors, popularly known as the ‘shrimp’.
The graph shows that these small hands have seen the total number of wallets drop in recent days. To be more specific, approximately 487,300 shrimp emptied their wallets during this sale, a drop of almost 1%.
“History tells us that this is typically a sign of capitulation, which could lead to a rise in market prices until smaller traders start to become bullish on crypto as an investment vehicle again,” the analytics firm explains.
“The disappointment in market performance since the 11 ETF approvals more than two weeks ago is largely attributed as the cause of these portfolio liquidations,” Santiment added.
Spot ETFs have been one of the hot topics in the cryptocurrency community in recent months, and Bitcoin’s price rise has been driven in part by anticipation surrounding them. However, contrary to what some investors imagined, the market sold off on the news and BTC has not been able to recover so far.
However, the shrimp aren’t the only ones to have capitulated recently, as the 1-1,000 coin group has seen a drop of 4,752 wallets since January 5, while the 1,000+ BTC entities have lost 27 addresses since December 27.
The first group includes the medium-sized Bitcoin holding groups such as the ‘sharks’, while the last cohort includes the largest hands on the network: the ‘whales’.
However, it is clear that these larger entities had started selling before the approval of the spot ETF, while the shrimp were still optimistic about the event. And interestingly enough, since the small farmers began their latest capitulation, the whales have actually seen some growth in their addresses.
BTC price
Bitcoin has seen a sharp recovery push in the past day as the asset’s price has now bounced back towards the $40,800 mark.
Looks like the price of the coin has shot up over the last 24 hours | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, Santiment.net
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