Bitcoin and the rest of the crypto market have recovered and recouped most of the losses during the recent correction.
In addition to this recent rally, the leading asset could see further positive returns in the near term, according to the latest data.
Decrease in non-zero Bitcoin wallet addresses
Santiment's recent analysis of Bitcoin network activity revealed a significant decline in the total number of non-zero coin wallets over the past 10 days, with a net difference of -311,000.
While this might be a cause for concern for novice traders, the blockchain intelligence platform said such declines have coincided with moments of FUD in the market in the past. During these periods, small BTC wallets capitulate while larger addresses accumulate more. Taking these past events into account, Bitcoin saw significant price increases amid similar declines in active wallets.
For example, from September 23rd to October 23rd, BTC rose 28% despite a decline of 1.10 million non-zero wallets. Santiment observed that BTC rose 24% from January 21 to February 13 with a drop of 757,000 non-zero wallets.
Therefore, despite the recent decline in non-zero wallets, history suggests that Bitcoin could soon rally with positive returns if traders exit the market believing that the peak has been reached.
“If history is any indication, Bitcoin has a strong chance of generating positive returns before this exodus of non-0 wallets finally stops this round (due to traders’ assumption that the peak has been reached).”
Renewed in risk taking
Bitcoin experienced a significant sell-off ahead of the correction, triggering a decline to nearly $62,000. While the crypto asset is still almost 10% below its recent all-time high of $73,750, there is renewed appetite for risk among investors, especially after the Federal Open Market Committee (FOMC) meeting on March 20, like QCP Capital noted.
In addition to Bitcoin, altcoins such as Dogecoin, Solana and Ethereum also recorded significant gains in the last 24 hours with 13.35%, 9.09% and 6.07% respectively.
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