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On-chain statistics represent a new methodology designed to gain more insight into the crypto market. However, as a new industry, the blockchain sector initially faced an apparent lack of data, with consequent difficulties in realising accurate analyses.
Finally, we are entering a more mature market phase after several years. For example, one prominent crypto community member has recently pointed out that Bitcoin (BTC) prices appear to be pushed more and more by retail investors.
This article will sum up the data and outcome of this study, offering some thoughts over its potential effects on the global crypto economy.
A new wave of confidence?
Pascal Gauthier, CEO of Ledge (a company specialized in hardware solutions for the blockchain sector), offers a clear view of the crypto market. “There is a profound retail trend everywhere in the world,” claimed Gauthier, speaking of the recent trends in the BTC market.
“The number of addresses with the minimum number of BTC,” continues Gauthier, “is growing compared to the number of whales”. A “whale” in the investment sector is an investor owning an extensive portfolio on the market.
Gauthier discussed the state of the crypto industry and its future at the St. Moritz Crypto Finance Conference, and CNBC interviewed him. While one may argue that the crypto sector never really lost the confidence of its first investors, this recent trend appears to represent a significant change in the market.
The recent market change is certainly something that needs to be observed in the coming years. This is particularly true considering how important media such as Bloomberg frequently highlight how professional investors flood the crypto market.
Looking at the data
The data recently shared by Glassnode backs Gauthier’s argument. An excellent way to measure this trend is by counting the number of existing wallets with a non-zero BTC balance. Earlier this week, this number managed to hit an all-time high, being slightly below 40 mln wallets.
The trend has been growing significantly since October 2021, back when the price of BTC was consolidating above $60,000. Interestingly, the recent correction in BTC prices has not discouraged investors, with a steady increase in the number of wallets involved.
One may, of course, argue that the number of existing crypto wallets itself heavily grew over the same time. This growth may point to the entrance of new players interested in buying BTC.
However, it is essential to remind the readers that there exists no limit to the number of wallets each person can own, a factor that may skew the recorded data.
What do investors expect from Bitcoin in the future? This is a million-dollar (or, at the current exchange rate, 22.8 BTC) question. And, most importantly, whose opinion should matter the most?
It would be pretty straightforward to understand that corporate investors have a higher weight on the stock market in traditional finance. However, it can hardly apply the same reasoning to the crypto industry.
Looking at the retail sector, it is interesting to consider that very few JP Morgan’s clients believe we will see BTC reaching the $100,000 milestone in 2022. So while there are also different opinions, the market is not taking a clear stance.
As most investors join the BTC race only later (as the data from Glassnode proved), the current pause in the upward BTC trend raises questions. Moreover, the market wonders whether this phase represents a simple “calm before the storm”, preluding another high volatility period.
Where do we go from here?
Bitcoin has notoriously recorded remarkable growth on the market over the last few years. By looking at crypto live prices, many tokens appear to be highly correlated with the one launched by Satoshi Nakamoto. Consequently, understanding how BTC will move is essential to making an industry prediction.
The unprecedented number of new wallets carrying BTC is undoubtedly an indicator of a demand-driven market. Considering that the overall supply of BTC is limited by its algorithm at 21 million coins, the fact that demand is managing to grow more than supply is an exciting factor.
As experts argue, BTC scarcity may be one of the factors pushing up the prices of the most famous coin in the world. Moreover, with a progressive adjustment in the BTC mining algorithm difficulty, some may expect this trend to continue in the future.