The number of Bitcoin wallets with at least 1 BTC may soon hit one million – how could it affect the BTC price?
Bitcoin bear markets are almost always seen in a negative light. Net worth is disappearing and newer investors in the world’s largest cryptocurrency by market capitalization often find themselves deep in the red when making their first investments.
But the bear market of 2022 appears to have been a boom for a certain group of investors. That is, the group of retail crypto-believers who want to get their hands on at least one BTC token.
According to data presented by crypto analytics firm Glassnode, there were slightly more than 800,000 Bitcoin wallets with a balance of at least 1 BTC when Bitcoin hit an all-time high of $69,000 in November 2021.
FTX collapse accelerates trend towards self-storage, high conviction for retail investor buying
Despite the aggressive price drop over the past 15 months, the number has skyrocketed to over 980,000. A large part of that jump came after the untimely collapse of formerly one of the world’s largest cryptocurrency exchanges FTX, which resulted in the loss of customers the access to crypto deposits worth billions.
The FTX collapse dealt a severe blow to crypto-investors’ confidence in depositing their assets in centralized entities, hence the rapid shift towards self-storage of crypto. The number of BTC held by exchanges is currently around 2.275 million, down from 2.53 million before FTX’s withdrawal halt.
But the FTX collapse only served to accelerate a trend that was already underway. High conviction personal investors have clearly used the 2022 bear market as an opportunity to own at least 1 BTC for the first time. In other words, this group of investors has clearly also bought the dip. And if the current rate of growth in the number of wallets holding at least 1 BTC continues, it will likely hit the 1 million mark within a few months.
How might this affect the BTC price?
2022 shows that growth in the number of Bitcoin wallets with a balance of at least 1 BTC does not necessarily go hand in hand with upside in the BTC price. In fact, recent history suggests that the number of wallets with at least 1 BTC is more likely to hit a million if Bitcoin’s price falls from its current level in the $20Ks, rather than if it continues to level higher.
That’s because, since Bitcoin’s sharp price rise since the beginning of the year, the number of 1 BTC holding wallets has pretty much stagnated. It is clear that investors in this group have been tempted by the market rally to release (some of) their coins to newcomers. In fact, the number of non-zero balance wallet addresses reached a new record in mid-February of over 44.2 million.
Continued temptation by this group to release coins to smaller wallets as the BTC price rises could be interpreted as bearish, or at least a headwind to the price. But assuming that the pool of investors who own at least 1 BTC is dominated by investors with a “HODLer” mentality, that might not be a bad thing for the Bitcoin price.
That’s because, according to Glassnode’s popular Realized HODL (RHODL) Ratio indicator, when HODLers start releasing coins after an extended period of accumulation in the middle of a bear market, this can often be taken as a bullish sign. Glassnode’s RHODL multiple takes the ratio of realized market value of coins that were last moved less than a week ago versus 1-2 years ago.
The RHODL ratio is in the process of bottoming out after hitting historic lows previously consistent with bear market bottoms.
