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Bitcoin is now forming a pattern that has caused it to take off — TradingView News
On-chain data shows that Bitcoin is forming a pattern in its Total Holders, which has recently proven bullish for the cryptocurrency.
Bitcoin has seen a drop in its total number of holders recently
According to data from on-chain analytics firm Santiment, BTC investors have been liquidating their portfolios amid the asset’s recent bearish streak. The relevant metric here is the “Total Amount of Holders,” which measures, as the name suggests, the total number of addresses holding some balance on the network.
When the value of this metric rises, it means that new investors are joining the network, and old investors who sold earlier are returning. The trend could also arise due to existing users creating new addresses for privacy purposes.
In general, some net adoption occurs when the Total Number of Holders increases. Adoption is a constructive sign for any cryptocurrency in the long term.
On the other hand, the indicator registering a decline implies that some investors have decided to exit the asset, as they are completely emptying their portfolios.
Now, here is a chart showing the trend in Total Holders for the top five coins in the industry: Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Cardano (ADA) and Chainlink (LINK), since the beginning of the year:
BTC News
As can be seen in the chart above, the total number of holders has recently experienced a drawdown for Bitcoin. This decline in the metric occurred while the price of the asset itself was falling.
In total, 566,000 BTC wallets have emptied over the past three weeks. The timing suggests that the bear market has spooked these investors and caused them to exit.
Interestingly, Ethereum, Cardano, and XRP continued to see a net increase in this indicator, implying that the adoption of these altcoins has only increased.
While BTC’s drop implies that holders are moving away from the network, the fact that FUD is the reason behind this exit could play in the cryptocurrency’s favor.
Historically, Bitcoin tends to show movements in the opposite direction to what the crowd thinks, so developing FUD has often led the coin to encounter an upward reversal.
From the chart, it is clear that the total amount of holders also decreased in January and February, and this trend occurred after a strong rally of the coin towards a new all-time high (ATH).
“Patient bulls should be happy about this, as self-liquidating portfolios from impatient naysayers are a sign of FUD-causing funds, just as we saw in January,” Santiment notes.
BTC Price
At the time of writing, Bitcoin is trading around $57,400, down more than 7% over the past week.