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Bitcoin bear markets are almost always viewed in a negative light. Net worth evaporates, and recent investors in the world’s largest cryptocurrency by market capitalization often end up in the red on their initial investments.
But the 2022 bear market appears to have been a boom for one particular investor cohort. So a cohort of retail-scale crypto believers looking to get their hands on at least one BTC token.
Bitcoin wallets with a balance of at least 1 BTC were just over 800,000 when Bitcoin hit a record high of $69,000 in November 2021, according to data presented by crypto analytics firm Glassnode.
FTX Collapse Accelerates Trend Towards Self-Custody, Dip Buying For High Conviction Retail Investors
That number has skyrocketed to over 980,000, despite significant price cuts over the past 15 months or so. Much of that surge came after the premature demise of FTX, formerly one of the world’s largest cryptocurrency exchanges, leaving customers with access to billions of dollars worth of cryptocurrency deposits. lost.
The collapse of FTX has severely damaged crypto investor confidence in depositing assets in centralized entities, leading to a rapid shift to self-custody of cryptocurrencies. The number of BTC held by the exchange is currently around 2.275 million, down from 2.53 million before FTX’s withdrawal suspension.
However, FTX’s collapse only accelerated a trend that was already underway. Confident retail investors are clearly using the 2022 bear market as an opportunity to own at least 1 BTC for the first time. In other words, this group of investors is clearly buying dips. And if the number of wallets holding at least 1 BTC continues to grow at the current pace, he could cross the million mark within a few months.
What impact could this have on the BTC price?
2022 shows that the increase in the number of Bitcoin wallets with a balance of at least 1 BTC does not necessarily go hand in hand with the rise in BTC price. In fact, recent history suggests that the number of wallets with at least 1 BTC could reach 1 million if the price of Bitcoin were to drop from its current $20,000 level, rather than continue to rise steadily. suggested to be high.
That’s because the number of wallets holding 1 BTC has mostly stagnated since Bitcoin surged early in the year. Clearly, investors in this cohort want to release (part of) the coin to new entrants, tempted by the market recovery. In fact, the number of wallet addresses with non-zero balances hit a record high in mid-February, when he surpassed 44.2 million.
As the price of BTC rises, the continued lure of this cohort to release coins into smaller wallets could be interpreted as bearishness, or at least a headwind to prices. Assuming the cohort of investors who own is dominated by investors with a “HODLer” mentality, that might not be a bad thing for Bitcoin’s price.
This is according to Glassnode’s Popular Realization HODL (RHODL) ratio indicator, when HODLers start releasing coins after a long period of accumulation following a bear market, this can often be seen as a bullish sign. It’s for Glassnode’s RHODL multiple is the ratio of the realized market cap of the coin he last moved within a week to the one or two years ago.
The RHODL ratio is in the process of bottoming out after reaching historical lows that have coincided with bear market troughs in the past.