Bitcoin experienced a significant sell-off pressure as its price dropped below $40,000 earlier this week. On-chain data indicated a substantial liquidation among small Bitcoin wallets during the increased selling period.
On-chain data provider Santiment reported a notable decrease in the total number of Bitcoin wallets, marking the fastest decline since before the major rally in October 2023. Over 487,000 wallets holding one or less Bitcoin were liquidated in just the last four days, suggesting a similar level of impatience among investors.
Historical patterns suggest that such rapid declines in wallet numbers often precede a market price jump, related to a capitulation phase. This trend is likely to continue until small investors regain optimism in cryptocurrency as a viable investment.
The rejection of 11 spot Bitcoin ETFs in the US in the past two weeks contributed to wallet liquidation, disappointing price expectations. Santiment highlighted this as a potential sentiment shift among small investors, indicating the market’s readiness for potential adjustments.
Investors are closely monitoring BTC’s price movements, with the largest cryptocurrency trading at $40,104, up 0.73% in the last 24 hours, with a market value of $786 billion. Analysts warn of a potential 15-20% price drop and further downside retractions. Crypto analyst Ali Martinez cautioned that a fall below $38,130 could lead to significant losses for short-term BTC investors, potentially triggering a new wave of panic selling.
