The price rally above $20,000 in the second week of January led to FOMO (fear of missing out) in the market, especially among small bitcoin holders.
There was a huge spike in BTC addresses containing 0.1 BTC or less after January 13th. According to data shared by crypto analytics firm Santiment, 620,000 new BTC addresses have appeared since the BTC price spike on January 13, for a total of 39.8 million.
Bitcoin addresses containing 0.1 BTC or less. Source: Santiment
The rise in Bitcoin addresses holding small amounts indicates a re-growth of investor optimism in 2023. The growth of these small addresses was very limited and slowed significantly after the FTX crash in November 2022, but 2023 saw an increase in the rate of new address creation.
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The recent surge in Bitcoin micro addresses is the highest since November 2022, when BTC fell to a cycle low around $16,000. The price drop prompted small traders to buy BTC at a lower price. The current rally has been attributed to the growing bullish sentiment in the market, with several altcoins, with the exception of Bitcoin, also recording multi-month highs, while the overall cryptocurrency market is up over 30%.
Related: Bitcoin, Ethereum, and Select Altcoins Set to Resume Despite the Stagnation in February
Bitcoin continued its bullish momentum in the first week of February, reaching a five-month high above $24,000. However, the $24,000 resistance is proving unsustainable as the price is hovering around $23,000 at the time of writing. Market experts believe that February may not be as bullish as January.
Bitcoin price chart 1 year. Source: Coinmarketcap
Amid confusion over how macroeconomic data in the US will affect market sentiment, market analysts have warned that this year’s rebound in cryptocurrencies and stocks could turn bearish this month. They attributed the upcoming potential downside to the extent of interest rate hikes by the Federal Reserve.