Bitcoin Sheds Dumb Money

Small-volume buyers are just as interested in $48,000 Bitcoin as in $3,600 Bitcoin. BTC is back in favor with regular investors, trading at $48,000.

BTC/USD was a hot pick for those able and willing to invest after it crashed to $3,600 in March 2020. That phenomenon is now returning.

Changes in balances for wallets holding 1 BTC or less typically indicate that small-scale investors have reached their highest level since March.

The significant difference at the end of 2021 is that Bitcoin costs $48,000 rather than $3,600 as Larger existing holders are still behaving erratically at current price levels. 

Local peaks in the metric have historically signaled the start of price bull runs, indicating local price bottoms. The data supports the theory that Bitcoin’s near 40% drop from all-time highs of $69,000 flushed out speculative market bets.

Markets

Bitcoin, altcoins, and stocks rose after the Fed announced its 2022 policy roadmap. However, bears still have a $755 million options expiry this week. While the denial of the ETF request anticipates, the regulators’ reasons may be concerning for some investors. Due to unregulated exchanges and high trading volume based on Tether’s stablecoin, the US Securities and Exchange Commission cited the inability to avoid market manipulation in the broader Bitcoin market.

Analyzing the broader market structure is critical, especially since investors closely follow Federal Reserve meetings in the United StatesRegardless of the magnitude of the Fed’s upcoming tapering of its bond and asset repurchase program. Bitcoin has tracked the US Treasury yields over the last year. If the current short-term negative sentiment persists, bears could quickly drive the price down 4% from its current level of $48,500, profiting up to $105 million if Bitcoin remains below $47,000.