Explaining Bitcoin holders' shifting loyalties to BTC

The number of Bitcoin wallets with a balance decreased.
If the CLLD becomes negative while BTC’s price falls, the coin might reverse upward.

According to on-chain analytic provider Santiment, Bitcoin [BTC] holders are looking to have a share of the recently approved ETFs. The firm made this known on the 11th of January via X (formerly Twitter).

When the year started, there were about 52.64 million Bitcoin wallets with coins in them. However, AMBCrypto confirmed that this number had declined.

Also, that was not the only thing. There has also been a dearth in the creation of new addresses.

📊 With the approval of #BitcoinETF's yesterday, we may continue to see a slight decline in active wallets on #Bitcoin's #blockchain. Though this likely won't impact price, a portion of traders may vacate their existing $BTC wallets in favor of #ETF exposure to

(Cont) 👇 pic.twitter.com/l5Q8OmOP5O

— Santiment (@santimentfeed) January 11, 2024

Traders take Bitcoin’s volume to the ETFs

Furthermore, it was worth noting that 40,000 wallets liquidated all of their BTC. So, this could only mean one thing— exposure to the Bitcoin ETFs. Regardless of the movement, the BTC price might not be affected.

However, the first day of trading the ETFs live happened on the 11th of January. This brought an increase in volatility to BTC. Within the first hour, Bitcoin jumped from $47,000 and traded above $49,000.

But it did not take long for the coin to erase all its gains, and fall below $46,000.

At press time, the price of Bitcoin changed hands at $46,029, suggesting that the initial storm had become calm. On the same day, AMBCrypto observed that the Bitcoin volume increased. At some point, on-chain data showed that the volume climbed to $62.07 billion.

The volume shows the amount of coins across all transactions on the network. So, this means that there was a lot of buying and selling of BTC during the period.

However, it did not take long for the volume to fall below $50 billion. This indicates that interest waned within a short time. The notion was also confirmed by the Open Interest (OI) in BTC.

Bitcoin volume, BTC price, and open Interest

Source: Santiment

Shorts wiped out and it could be longs turn

Concerning the price action, the decline in OI and volume implies that the downtrend was getting weak. Also, if both metrics continue to decline alongside the Bitcoin price, then a return to the upside might be possible.

In this instance, Bitcoin might not fade returning to $48,000 for a start.

Furthermore, a look at the Liquidation Levels showed that Bitcoin headed toward the Magnetic Zones when it moved up to $49,000. For context, Liquidation Levels are estimated price levels where a liquidation event can occur.

Using Hyblock Capital’s data, we discovered that the price moved in that direction because of the high liquidity there. Also, traders with high-leverage short positions would have had their Stop Loss triggered at that point.

Read Bitcoin’s [BTC] Price Prediction 2024-2025

However, the bias has changed as indicated by the Cumulative Liquidation Levels Delta (CLLD). As of this writing, longs with high leverage were at risk of liquidation.

Source: HyblockCapital

This was because the Bitcoin price had fully retraced and the CLLD had become positive. But if the BTC price sharply falls and the CLLD moves in the negative direction, a return to the upside might be confirmed.