- Bitcoin price remains rangebound under the $100,000 milestone on Thursday.
- On-chain data shows retail traders and small investors are likely capitulating out of fear.
- The count of total non-empty wallets on the Bitcoin blockchain has dropped to the lowest level since December 10.
- Imran Lakha of Options Insight believes Bitcoin’s volatility could normalize after key events as traders adapt to range-bound conditions.
Bitcoin (BTC) retail traders and small wallet holders reduce their holdings amidst fear of a steeper correction in the largest cryptocurrency by market capitalization. BTC price consolidates below the $100,000 level on Thursday, erasing less than 2% of its value on the day.
Bitcoin traders are fearful, a positive sign for BTC price
Crypto intelligence platform Santiment notes that Bitcoin now has 277,240 less non-empty wallets than it did three weeks ago. The change in the metric indicates that small wallet holders and retail traders are offloading their BTC, fearful of further decline in the token.
The decline is typically a sign of fear of a market-wide correction in crypto, and as retail belief drops, the token's mid- to long-term price performance could improve. Santiment’s analysts note that while retail traders and smallholders drop their BTC holdings, whales and sharks (meaning large and institutional holders of Bitcoin) accumulate the coins.
According to historical data, whale accumulation could drive up the price when fear is at its highest level among market participants.
Santiment’s data shows that the total non-empty wallets on Bitcoin’s network have dropped to 54.44 million, the lowest level recorded since December 10.
Bitcoin non-empty wallet count | Source: Santiment
Bitcoin volatility could normalize, rally to new all-time high likely
Realized volatility, a metric that measures the historical volatility of an asset, climbed from mid-40s to mid-50s, according to Imran Lakha of Options Insight. In a YouTube video, Lakha comments on the likelihood of a short-term correction in Bitcoin price, according to options data by Amberdata.
Evaluating the volatility spread in the options market, Lakha expects volatility to normalize by March options expiry. This reinforces the idea that the worst of the “flash crash” may be behind us.
Short-term volatility remains high, however options data confirms a bullish continuation in Bitcoin in the near term.
According to a Nansen report titled "Options Strategies in a range bound market," published on February 11, BTC funding rates have stayed below 10% and open interest for Bitcoin has decreased. The two metrics indicate that there is relatively lower leverage in the market and this is typically conducive to gains in Bitcoin price.
Uldis Teraudklans, Chief Revenue Officer at Paybis told FXStreet in an exlcusive interview,
"We are seeing increasing pro-Bitcoin sentiments in the strategic reserve discussions. Both on the business level, like the case of Microstrategy, its successful Bitcoin hoarding strategy has already attracted several players.
Among the corporate Bitcoin buyers are pharmaceutical companies, advertisers, and others, which have amassed the cryptocurrency in part to diversify and hedge against inflation, but also to fend off short-sellers by boosting their shares."
Technical analysis: Bitcoin trades less than 15% below the all-time high
Bitcoin is hovering around the $96,000 level, less than 15% away from its all-time high of $109,588 reached on January 20. On the daily timeframe, Bitcoin could find support at the $93,572 level, which coincides with the 50-day Exponential Moving Average (EMA).
On the upside, Bitcoin faces resistance at the upper boundary of the Fair Value Gap (FVG) at $103,278, a key level above the $100,000 milestone.
The momentum indicator Moving Average Convergence Divergence (MACD) flashes consecutive red histogram bars, shorter than the previous ones, meaning the negative underlying momentum in Bitcoin’s price trend is waning.
BTC/USDT daily price chart | Source: TradingView
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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