The failure of a bullish upswing after the launch of the spot Bitcoin ETF seems to have circulated a bearish wave across the markets. The Bitcoin price is experiencing minor upswings, which unfortunately is resulting in major pullbacks. The current trend followed by the star token suggests the bears continue to hold a larger dominance. As a result, bulls who have been stuck above the levels of $48,000, $47,000, $43,400, and $41,600 may now be stuck at $40,000 for an extended period.
The markets were more confident over the approval and launch of the Spot Bitcoin ETF and expected the price to rise close to $50,000, as the highs for the year were marked above $48,500. However, failing to do so may have circulated a sense of disappointment and fear among the market participants who may have just entered the crypto space. As per the data from the Santiment, a huge drop in the number of Bitcoin wallets has been witnessed in recent times.
The decline has been observed in three major variants, wallets holding BTC within the range 0 to 1, 1 to 1000, and more than 1000. While the decline in the latter two variants has been witnessed for a long time, wallets holding 0 to 1 BTC have recorded a drop of 0.94% since the launch of the ETF. The number of total Bitcoin wallets has been declining at its swiftest rate since early October, just before the major cycle began. Therefore, the traders are showing a similar level of impatience, with over 1 BTC or less being liquidated in the last 4 days alone.
This pattern indicates that it is a sign of capitulation, which can lead to a market price bounce until the small traders again become optimistic about the rally. While the negative impact of the launch of the spot Bitcoin ETF is considered a major reason for the drop in wallet count, the upcoming Bitcoin halving may turn the tables for the entire crypto space. History tells us the BTC price consolidated just before the halving, and the excess squeeze was released soon after the event.
Therefore, with this, the bullish narrative continues to remain in play for the Bitcoin price rally, holding the $50,000 target intact.