Santiment said the number of non-zero bitcoin wallets has fallen by about 30,000 since Oct. 16, a shift that may point to retail capitulation. CryptoQuant separately said the market may be in the early stage of a bull cycle, suggesting significant upside potential could remain because a signal seen before previous major rallies has not yet begun to form.

CryptoQuant sees an early-stage bull cycle

In previous cycles, major bitcoin rallies began after the share of bitcoin that had been in circulation for more than 18 months first increased and then started to decline, according to CryptoQuant.

Analysts currently estimate that the market is in the early stage of a bull cycle and that the corresponding signal has not yet started to form. That could mean the market retains significant upside potential and that the rally could be prolonged.

CryptoQuant also cited weak interest in cryptocurrencies among the broader public. Even among people who follow the market, many remain in no hurry to invest, according to the analytics platform.

CryptoQuant said those conditions suggest the market has not yet overheated and that the main leg of a move higher may still lie ahead.

Non-zero bitcoin wallet count declines

The number of non-zero bitcoin wallets has fallen by about 30,000 since Oct. 16, bringing the total closer to 59.95 million, according to Santiment.

Santiment attributed the decline to possible disappointment among small holders after an extended period of stagnation in bitcoin’s price. The platform said a lower wallet count does not necessarily indicate that the network’s utility has deteriorated.

Retail investor capitulation has historically been more likely to create favorable conditions for further growth than an influx of new buyers during a sharp price increase, Santiment said. Under that scenario, participants who have lost patience leave the market while the majority’s expectations become excessively pessimistic.

Santiment identified $80,000 as a key level in the current contest between buyers and sellers. If the number of non-zero wallets continues to fall while bitcoin remains above $80,000 and retakes the area around $82,500, that would strengthen the contrarian signal that a local bottom may be forming, the platform said.

By contrast, a sustained decline below the recent $79,000 zone would weaken that scenario and suggest investor capitulation may continue.

Galaxy Digital previously said bitcoin’s bear cycle had ended.

Source: Incrypted