Bitcoin Bottom May Be Near as 30,000 Wallets Disappear, Santiment Says
Bitcoin may be approaching a potential market bottom as the number of funded wallets declines, suggesting that smaller holders could be losing confidence after weeks of stagnant prices. Blockchain analytics firm Santiment reported on Oct. 26 that approximately 30,000 nonempty Bitcoin wallets had disappeared since Oct. 16, reducing the total to around 59.95 million.
Santiment interprets the decline as a possible sign of retail capitulation, a market condition in which smaller investors give up their positions during periods of weakness. From a contrarian perspective, widespread pessimism and reduced participation among retail holders can sometimes precede a recovery, although the latest figures do not confirm that a price bottom is in place.
Bitcoin Wallet Declines Revive Retail Capitulation Theory
The latest wallet data follows an earlier contraction in smaller-holder groups that preceded Bitcoin's recovery above $85,000. In a September assessment, Santiment identified 69,494 addresses leaving two balance categories during July and August: wallets holding between 0.1 and 1 BTC and those holding between 1 and 10 BTC.
However, a reduction in funded addresses does not necessarily mean an equivalent number of investors have sold their Bitcoin. Wallet balances can change as coins move between addresses, investors consolidate holdings, or balances shift outside the specified categories. A single investor may control multiple addresses, and an emptied wallet can become active again after receiving funds.
These distinctions are important when interpreting on-chain data. The number of nonempty Bitcoin wallets measures funded addresses rather than individual market participants, meaning that wallet declines alone cannot establish the scale of retail selling or confirm a change in investor sentiment.
Small Bitcoin Holders Previously Continued Accumulating
Santiment's latest interpretation follows an earlier warning that retail accumulation could be limiting Bitcoin's recovery prospects. In its Oct. 9 assessment, the firm reported that wallets holding between 10 and 10,000 BTC had accumulated more than 85,000 BTC over approximately three weeks.
At the same time, wallets holding less than 0.01 BTC continued to increase their balances, according to Santiment. The firm viewed this buying activity among smaller holders as an obstacle to a stronger recovery while Bitcoin prices were declining.
The change in wallet participation identified in the Oct. 26 analysis provides a different signal from that earlier pattern. If smaller holders are now withdrawing from the market, Santiment's contrarian framework suggests that selling pressure and deteriorating sentiment could eventually create conditions for a rebound. Whether that interpretation proves correct will depend on subsequent wallet activity and price behavior.
Bitcoin Faces $80,000 Support and $82,500 Recovery Test
Bitcoin's technical position presents another challenge for traders assessing the possibility of a market bottom. By Oct. 24, BTC had fallen below its 50-day moving average, which tracks average daily closing prices over the preceding 50 days. The indicator had served as support for approximately two months before the breakdown.
Market indicators also pointed to weakening conditions. In an Oct. 21 assessment, CryptoQuant contributor Darkfost highlighted a decline in the Bull Score Index from 80 to 60. The index combines 10 measures covering factors such as demand, network activity, liquidity and profitability to assess the broader Bitcoin market environment.
The decline in the index adds to the uncertainty surrounding a potential recovery. Although reduced participation among smaller holders may support a contrarian bottom thesis, weakening technical momentum and market conditions remain important factors in evaluating whether Bitcoin can regain lost ground.
Santiment Identifies Key Bitcoin Price Levels
Santiment identified $80,000 as the immediate level to watch for Bitcoin. The firm said the potential bottom signal would become stronger if funded wallet numbers continued to decline while BTC held above $80,000 and recovered to approximately $82,500.
Conversely, a sustained move below the recent $79,000 area would weaken the near-term recovery scenario. Santiment warned that such a breakdown could indicate that capitulation had not yet run its course, potentially delaying the formation of a durable market bottom.
The latest analysis therefore presents a conditional outlook rather than confirmation that Bitcoin has reached its lowest point. Declining wallet participation could indicate that smaller holders are stepping away, but the price response around $80,000, the ability to reclaim approximately $82,500 and the behavior of funded addresses will remain central to Santiment's assessment.
source: news.bitcoin
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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