Bitcoin made an impressive jump to a local high of $ 51,000 after falling to a three-month low of $ 42,333 in December.

According to data from the crypto newsletter service Ecoinometrics, the Bitcoin rally is mainly due to increased buying activity at addresses with less than 1 BTC. In the meantime, addresses with a credit balance between 1,000 BTC and 10,000 BTC have little support.

“Bitcoin is still stuck in a situation where wallet addresses with less than 1 BTC balance are willing to pile up, while whale addresses don’t actually pile up,” Ecoinometrics said. notice after evaluating the change in the amount of bitcoin across the small and rich pool of wallet addresses, as shown in the graphic below.

On-chain data from Bitcoin wallet clusters and whale wallets | Source: Econometrics

Ecoinometrics further claims that the situation is “not ideal” for Bitcoin, suggesting that BTC price is likely to continue its downward trend in the absence of influential buyers.

Bitcoin bear market target is near $ 42,000

Ecoinometrics’ bearish outlook comes as Bitcoin grapples with the Fed’s policy decision on Wednesday (December 15) to cut its bond purchases by $ 30 billion a month for full cuts in April next year.

The $ 120 billion per month stimulus plan was instrumental in bringing the BTC price below $ 4,000 in March 2020 to an all-time high (ATH) of $ 69,000 in November 2021. And now liquidity threatens to fade as lending becomes more expensive As the Fed prepares for three rate hikes in 2020, many fear it will reduce investors’ appetites for cash with risky assets like Bitcoin.

“Bitcoin price briefly surged above $ 49,000 after the Fed’s FOMC meeting in 2019 confirmed at least three rate hikes and some adjustments to current market support activity.”

Mike Novogratz, CEO of Galaxy Digital Holdings, admits that Bitcoin is “in pain” but predicts the price won’t drop below the $ 42,000 support.

“So much money is flowing into the room, it doesn’t make sense if the crypto prices fall below that.”

BTC / USD daily frame price chart with support from 40,000 to 42,000 CZK | Source: TradingView

Retail bitcoin accumulates heavily

In fact, wallet addresses with more than or equal to 1,000 BTC have steadily declined in 2021, from 2,475 on February 9 to currently 2,147.

Total number of addresses with a balance of at least 1,000 BTC | Source: Glassnode

In contrast, the number of wallet addresses with at least 0.01 BTC (about $ 485 at current exchange rates) increased from 8.46 million in 2021 to 9.39 million today.

In the meantime, wallet addresses with at least 0.1 BTC (approx. 4,855 US dollars) have risen from 3.12 million to 3.3 million in the same period, which shows that “small fish” play an important role from 69,000 US dollars. Dollars this year.

Total number of addresses with a balance of at least 0.01 BTC and 0.1 BTC | Source: Glassnode

Further evidence that retail investors, wallet addresses holding at least 1 BTC are an important factor behind the rise in Bitcoin’s price.

The number of these wallet addresses declined in the first half of 2021 when the crypto market struggled with the China ban and other negative news, but began to rise after El Salvador accepted Bitcoin.

Total number of addresses with a credit of at least 1 BTC | Source: Glassnode

The number of wallet addresses with at least 1 BTC also continued to increase during the price correction from USD 69,000 to USD 42,333 during the November-December trading session, indicating an accumulation. It hit a seven-month high on Wednesday, just as Bitcoin rebounded from weekly lows near $ 46,000 to $ 50,000.

Also on-chain analyst Willy Woo recognize The rally of retail investors increased after the March 2020 crash that led to Bitcoin’s two-year bull run.

Accumulation between wallets with less than 1 BTC | Source: Willy Woo

Additionally, Bitcoin’s momentum indicator prior to its breakout at $ 69,000 earlier this year also suggests a possible breakout.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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