Crypto News

Bitcoin Wallet Liquidations Signal Capitulation Among Traders

Recent data indicates a notable decline in the total number of Bitcoin wallets, marking the swiftest rate since early October, just before the major crypto bull cycle began.

Over the past four days, more than 487,000 wallets holding 1 $BTC or less have been liquidated. This reflects a 0.94% decrease in the number of small wallets.

Similarly, wallets holding between 1 and 1,000 BTC experienced a decline of 4,752 wallets since January 5th, representing a 0.46% decrease. Meanwhile, wallets holding 1,000+ BTC saw a reduction of 27 wallets since December 27th, amounting to a 1.32% decline.

This trend is often interpreted as a sign of capitulation, indicating a loss of confidence among newer traders. Historically, such developments have preceded market price bounces. This is as smaller traders begin to regain optimism towards cryptocurrencies as an investment vehicle.

Recent Bitcoin ETF Buzz In The Market To Watch

The recent disappointments in market performance following the approval of 11 ETFs over two weeks ago are believed to be the primary cause behind these wallet liquidations.

Notably, Grayscale’s Bitcoin spot ETF, GBTC, experienced a net outflow of $394 million on January 25th. This is with a single-day trading volume of $502 million. While net outflows have slowed slightly over the past three trading days, Grayscale deposited 9,434 $BTC ($376.5M) to Coinbase Prime a few hours ago.

Since the ETF’s passage, Grayscale has deposited a total of 103,134 $BTC ($4.23B) to Coinbase Prime, holding a total of 510,682 $BTC ($20.43B).

These developments underscore the evolving dynamics within the cryptocurrency market, as traders and institutions navigate through periods of volatility and market sentiment shifts.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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