According to data from on-chain analytics firm Santiment, the Total Holders index just saw the largest three-day drop for Bitcoin since March.
As the index name implies, “Total Holders” tracks the total number of wallets on a given cryptocurrency network that currently have a non-zero balance.
When the value of this index increases, it shows that either new investors are joining the blockchain or old ones who previously left are returning. This index also naturally increases when existing users create new addresses for security reasons.
Whatever the reason, an increase in the number of holders usually implies net adoption for the asset, which can benefit its price in the long term.
Conversely, when the index drops, it shows that some users are completely emptying their wallets. Such a trend shows that some holders have decided to leave cryptocurrencies.
Below is a chart showing the trend in Total Holders of the top two coins in the sector, Bitcoin and Ethereum, over the past six months:
As the chart above shows, the total number of holders has recently decreased for Bitcoin, suggesting that some selling has occurred. The recent three-day drop is the sharpest the index has seen since before prices hit an all-time high in March.
This drop occurred because investors took profits while the rally persisted. This time, the price of the cryptocurrency is experiencing bearish action, so an exodus of holders is likely due to fears of further price declines.
While Bitcoin saw its Total Holders index decline, it continued to rise for Ethereum, as the network continued to reach new highs. Therefore, it seems that ETH investors are not experiencing a sell-off just yet.
History shows that assets often move against investor expectations, so fear in the market often helps turn prices. As Bitcoin investors appear to be scared, it is possible that a bottom may be near for the coin.
The fact that Ethereum continues to grow at the same rate as before may not be all bad, but it shows that its users are not worried about prices at the moment.
You can see Bitcoin prices here.
Thach Sanh
According to Bitcoinist
