Bitcoin Addresses with Non-zero Balance Hit a New Record High. Will New Investors Pump The BTC Price?
This week saw a record number of Bitcoin wallet addresses with a balance above zero of the first, most popular, and largest cryptocurrency in the world by market capitalization. This suggests that the Bitcoin network’s global adoption is continuing to grow despite the challenging bear market of 2022 and the uncertain global economic outlook of 2023.
Glassnode’s data shows that the number of Bitcoin addresses having a balance above zero rose to 43.8 million, according to the crypto analytics firm.Th For the first time, January was the month of record. This brought the total number of addresses to 43.76 million, an increase above the record of 43.76 millions set in November 2022.
The collapse of FTX, once one of the most important cryptocurrency exchanges worldwide, in November caused a shift to crypto self-custody. Investors raced to get their Bitcoin from exchanges, which triggered a spike in address numbers.
However, many wallets lost all their Bitcoin after jitters from FTX’s bankruptcy. This led to a capitulation and a rapid pullback in nonzero addresses numbers.
The Bitcoin price has seen a 40% increase since the beginning of the year, mainly due to 1) optimism about a better macro background in 2023 and 2) increased technical and on-chain signs that the Bitcoin bear markets is over. This will allow enough investors to return to the Bitcoin market and bring the non-zero wallet addresses count back up to a record.
The arrival of small investors drives non-zero address growth
Glassnode data shows that the latest surge in address numbers for Bitcoin wallets has been, unsurprisingly, driven by an increase in wallets with a small amount. Just recently, the number of Shrimp wallets with less than 1 BTC has surpassed 42.827 million.
The number of Crab-, Fish-, Shark-, and Whale addresses that hold 1-10, 10-1K, and more than 1K BTC, respectively, has remained stagnant. Initial surge in Crab, Fish, and Shark wallet numbers was due to the Bitcoin price drop following the FTX collapse. Larger investors used the opportunity of buying the dip.
The recent increase in non-zero wallet addresses numbers can be interpreted as a shift in Bitcoin ownership from larger investors to smaller investors. Due to their belief in the cryptocurrency’s future outlook, larger investors are more likely than smaller ones to drop into the HODLer category.
Evidence is mounting that the Bitcoin market may be beginning to transition from HODLers and new investors – a trend which often coincides with a new Bitcoin bull.
Rotation: From HODLers to New Investors Starting – What Does This Mean for BTC?
The Glassnode Realized HODL Ratio, a ratio between the two Bitcoin age bands (RHODL), appears to be nearing its bottom. The RHODL measures the spread of Bitcoin wealth between newer and more experienced investors. It is calculated by comparing the number coins that haven’t moved in the past 1-2 years with the number purchased within the last week.
The RHODL dropped to its lowest level since the 2019 bear markets in December but has seen a steady rebound since then. The above chart shows that RHODL rebounds often go hand in hand to a rising Bitcoin Price. This is because the RHODL captures a rise in Bitcoin demand from new investors. In the past, increased participation in Bitcoin markets has been associated with long-term price appreciation.
Does this mean that the Bitcoin price will rise due to the increase in non-zero wallet address? But that’s not the case. The bear market was not prevented by non-zero addresses numbers rising (slowly) through most of 2022. The capitulation by weak-handed short term investors resulted in price declines. This was due to the lack of demand from dip-buying investors.
Rising non-zero addresses can be considered a bullish sign. However, this must be accompanied with evidence that BTC wealth has been shifting towards newer investors. This is certainly the case right now.