The largest cryptocurrency Bitcoin (BTC) faced strong selling pressure this week as it fell below $40,000 at the beginning of the week. On-chain data indicates that during the current selling pressure, there was a significant liquidation in small-scale Bitcoin wallets.
Significant Drop in Total Number of Bitcoin Wallets
On-chain data provider Santiment reported a notable decrease in the total number of Bitcoin wallets, marking the fastest rate of decline since the beginning of the major rally in October 2023. This trend is indicative of a similar level of impatience among investors. In just the last four days, over 487,000 wallets holding one or less BTC were liquidated.
Historical patterns suggest that such rapid declines in wallet numbers are often associated with capitulation, a stage that could precede a jump in market price. This trend tends to continue until small investors regain their optimism towards cryptocurrency as a suitable investment vehicle.
Following the approval of 11 spot Bitcoin ETFs in the US over the last two weeks, the disappointment on the price front has been a significant factor contributing to the liquidation of wallets. Santiment highlighted that these developments could indicate a potential change in sentiment among small investors and that the market may be ready for potential adjustments.
What Awaits Bitcoin Investors?
Investors are closely monitoring BTC‘s price movements in anticipation of the next step. The largest cryptocurrency is currently trading at $40,104, up 0.73% in the last 24 hours, with a market value of $786 billion at the time of writing. However, analysts warn of the possibility of a further downward correction, with the price of BTC potentially falling by 15-20% from current levels.
Closely followed cryptocurrency analyst Ali Martinez recently warned that if Bitcoin’s price falls below $38,130, short-term BTC investors could face significant losses. Such a potential drop in Bitcoin’s price could lead to a new wave of panic selling as investors try to minimize potential short-term losses.
