Bitcoin (BTC) staged an impressive recovery after dropping to its three-month low of $42,333 on Dec. 4, rising to as high as $51,000 since.
The BTC price retracement primarily surfaced due to increased buying activity among addresses that hold less than 1 BTC. In contrast, the Bitcoin wallets with balances between 1,000 BTC and 10,000 BTC did little in supporting the upside move, data collected by Ecoinometrics showed.
“Bitcoin is still stuck in a situation where small addresses are willing to stack sats [the smallest unit account of Bitcoin], while the whale addresses aren’t really accumulating,” the crypto-focused newsletter noted after assessing the change in Bitcoin amounts across small and rich wallet groups, as shown in the graph below.
Bitcoin on-chain data featuring fish and whale BTC wallet clusters. Source: Ecoinometrics
Ecoinometrics further asserted that the situation for Bitcoin is “not ideal,” suggesting that the BTC price may end up resuming its decline in the absence of influential buyers.
Bitcoin’s downside target sits near $42K
Ecoinometrics’ bearish outlook appeared as Bitcoin grappled with the Federal Reserve’s policy decision on Wednesday to reduce its bond purchases by $30 billion every month to unwind them down by April next year entirely.
The $120 billion a month stimulus program was instrumental in sending the BTC price from below $4,000 in March 2020 to $69,000 in Nov 2021. And now that the liquidity threatens to go away, with lending to become costlier as the Fed prepares for three rate hikes next year, many fear that it would hurt investors’ appetite for risk assets like Bitcoin.
Bitcoin price briefly popped above $49,000 after the Fed FOMC meeting confirmed at least three interest rate hikes and some adjustments to the current market supporting practices in 2022. https://t.co/TpTX7tGmYL pic.twitter.com/lXw47icZmB
— Cointelegraph Markets (@CointelegraphMT) December 15, 2021
Mike Novogratz, chief executive officer of Galaxy Digital Holdings, admitted that Bitcoin might feel “pain ahead” but anticipated that its price would not fall anywhere beyond the $42,000-support.
“$42,000 is…
..
