The recovery of the Bitcoin price above the $67,000 level has triggered a round of selling, but it is not coming from the usual camp of big investors selling. This time it is the small traders who are unloading their bags and putting selling pressure on the price. This is not entirely a bad thing, however, as such selling has historically been bullish for the Bitcoin price.
Bitcoin Retail is dumping their bags
In a report on X (formerly Twitter), on-chain data tracker Santiment revealed an interesting trend among retail Bitcoin investors. When the price of Bitcoin rose above $67,000 this weekend, these small wallets saw this as the time to sell and secure profits.
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These wallets are wallets that have less than 0.1 BTC in their balance. This means that these wallets hold an average of $6,000 at the high end. In the space of a week, Santiment notes that their collective holdings have fallen by 0.46%.
🐟👋 #Bitcoin dances just above $66.1K as retail traders continue to do so #liquidate their possession despite the #crypto jump last week. Historically, it’s been encouraging that small wallets are dumping their coins into larger wallets #bullish sign for $BTC. https://t.co/wlz4XPhfMD pic.twitter.com/dTJAy5G6pL
— Santiment (@santimentfeed) May 19, 2024
Selling to smaller pockets is not new, but at this level it can have a significant impact on price. However, compared to when whales and sharks sell their BTC shares, retail investors’ sales tend to be bullish on the price. This is because when the smaller traders sell, the BTC is picked up by the larger traders, who usually have long-term investments.
Such as blockchain agency Crynet explains in a response to Santiment: “While the shedding of retail traders may seem concerning, it is often a bullish signal. Historically, this redistribution to larger holders indicates stronger hands in the market. Let’s see how this turns out.”
Bullish sentiment among investors is rising
The selling by small Bitcoin traders comes amid a jump in bullishness. As Santiment reported in an earlier post, bullishness among Bitcoin investors has now risen to a four-month high. The last time investors were this optimistic was in January 2024, when the price of BTC soared above $45,000.
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Bitcoin’s weighted sentiment now stands at 0.99, and while this is still down from its January high of almost 1.8, it remains one of the highest among large caps. Currently, only Chainlink (LINK) weighted sentiment is higher, after rising to a new one-year high of 1,829.
🥳 The audience’s sentiment has shifted to #Bitcoin after the surprise jump above $66K on Wednesday (and now above $67.2K). Additionally, #Chain link sees the most #bullish sentiment in over a year. #FOMO Staying low will allow these increases to continue. https://t.co/TcEPBdS9Oh pic.twitter.com/czvE1mOgId
— Santiment (@santimentfeed) May 17, 2024
Ethereum-weighted sentiment is currently at a low -0.44, while XRP and Binance’s BNB are around -0.37. This suggests that bearishness among these assets continues to dominate as crypto investors look to Bitcoin to lead the market.
At the time of writing, the BTC price is still trading at a high price of $66,900. The largest cryptocurrency by market cap is up 6.78% in the past week and down 0.5% in the past day, according to data from Coinmarketcap.
Featured image created with Dall.E, chart from Tradingview.com