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The recent approvals of 11 spot Bitcoin ETFs by the US Securities and Exchange Commission (SEC) have caused considerable discussion in the crypto space. While some see the development as a positive sign for the adoption of crypto assets by traditional financial markets, there are also concerns about the impact on the direct Bitcoin ownership structure.
Santiment reports: decline in Bitcoin wallets
According to Santiment, a market intelligence platform that provides on-chain and social media metrics for over 2,500 cryptocurrencies, the number of Bitcoin wallets with more than zero coins continues to decline. This trend has been emerging for almost four weeks, partly due to the uncertainty (FUD – Fear, Uncertainty, Doubt) in the crypto community. Santiment suggests that the declining interest in owning Bitcoin directly may be influenced by the emergence of new investment alternatives, such as spot Bitcoin ETFs.
The phenomenon of FUD plays an important role in the dynamics of the crypto market. Investors’ uncertainty and fear can lead to significant changes in investment behavior. The availability of ETFs now offers an alternative investment option that may be perceived as safer or easier, especially for those who have previously avoided direct ownership.
📉 #Bitcoin's wallets (with greater than 0 coins) are still declining as #crypto nears 4 weeks since the #SEC's 11 Spot #ETF approvals. This can be attributed to crowd #FUD, and less interest in direct $BTC ownership due to other investment alternatives. https://t.co/tjnjELxGw1 pic.twitter.com/xRymU7C0ro
— Santiment (@santimentfeed) February 7, 2024
Interim balance sheet: Direct Bitcoin ownership vs. ETF investments is the current status
The decline in Bitcoin wallets could be an indicator of a shift in interest from investing directly in BTC to novel financial products such as ETFs. This development could have long-term implications for BTC demand and price as ETFs offer a different form of market exposure.
While the direct BTC ownership structure is undergoing change, the introduction of Bitcoin ETFs could contribute to broader diversification and growth of the crypto market. These products could make it easier for new investor groups to access the market, opening up the potential for expanded exposure to the crypto space.
Crypto market mood Caution prevails: These are the current market observations for Bitcoin and Co.
According to current data from Santiment, a clearly cautious mood can be observed in the crypto markets this week. The usual momentum and growth that traders had become accustomed to since the bull market began in October appears to be fading.
🐻 With #crypto market caps ranging and lacking the usual growth traders have been accustomed to since the #bullcycle began in October, there is a notable #bearish sentiment that has taken hold of #crypto discourse this week. #Bitcoin, #Ethereum, #BinanceCoin,
(Cont) 👇 pic.twitter.com/c3M4bPxlhi
— Santiment (@santimentfeed) February 5, 2024
A noticeable bear market mood is spreading in the crypto community. This suggests that many investors are taking a more conservative stance and may be prepared for a market downturn.
Influence on leading cryptocurrencies: How does it affect the Bitcoin forecast?
This sentiment affects the entire range of cryptocurrencies, including leading assets such as Bitcoin, Ethereum and Binance Coin. The cautious stance could lead to a wait-and-see strategy among many investors, waiting for clearer signals of a market recovery or correction.
The lack of significant growth and increasing uncertainty could indicate that the market is entering a period of consolidation. In such an environment, investors may increasingly focus on fundamental analysis and longer-term investment strategies.
Another recent study also from Santiment shows that trading volume in the crypto market has seen a 22% decline in the last seven days, with a total volume of $288 billion across 2,842 assets monitored.
Market Analysis: Crypto Trading Volumes in Decline – A Phase of Indecision
This decline could indicate a period of indecision among traders who are in a kind of decision paralysis. The current market reluctance suggests that investors are looking for clear direction before becoming more involved again.
📊 The past 7 days of #crypto trading volume has totaled $288B, according to our 2,842 tracked assets. This is a -22% drop compared to last week. Traders are showing decision paralysis, and #FOMO or #FUD should return once we see the next big market swing. https://t.co/G6r38lPVYy pic.twitter.com/wmUimM0XgU
— Santiment (@santimentfeed) February 7, 2024
The current lull could represent a calm before the storm, as experience shows that strong market movements – whether driven by FOMO (Fear of Missing Out) or FUD (Fear, Uncertainty, Doubt) – often lead to a return in trading volume.