Recent data analysis from Santiment reveals that the Bitcoin (BTC) supply distribution by wallet size has experienced notable changes.

As of today, Bitcoin reached $58,000, with retail traders showing more optimism. However, for Bitcoin to return to its all-time high levels, key factors regarding wallet sizes need to shift, according to Santiment, a market intelligence platform.

Small wallets holding less than 1 BTC are currently at their highest ratio in seven months, while larger holders’ activity has plateaued. This change in supply distribution could play a critical role in Bitcoin’s future price movement.

Small Wallets Continue to Grow

Santiment’s data shows that wallets holding less than 1 BTC have been steadily increasing their holdings. This tier of holders reached their highest portion of Bitcoin supply held since February 7, 2024.

Bitcoin has reached as high as $58K today, with sentiment among retail traders beginning to look a bit more positive. Wallets with <1 BTC now hold their highest ratio of supply in 7 months.

However, an ideal setup for crypto to rebound back to all-time high levels would… pic.twitter.com/riPbS2W9qz

— Santiment (@santimentfeed) September 10, 2024

The rise in holdings of smaller wallets, often representing retail traders, suggest increasing confidence among new and smaller investors. However, this growing confidence among retail traders contrasts with what is typically seen during major market rallies, where large holders drive price surges.

Mid-Sized and Large Wallets Show Stagnation

Wallets holding between 1 and 100 BTC saw their portion of the supply peak on July 27, 2024. Since then, this mid-sized tier has shown little movement, with some slight declines, indicating neutral or stagnant activity. Similarly, larger wallets with over 100 BTC peaked on August 14, 2024, and have also shown reduced accumulation since then.

This indicates that neither mid-sized nor large holders are aggressively accumulating, which would generally signal strong bullish sentiment. Instead, the neutral behavior in these two key wallet sizes suggests caution or profit-taking.

According to Santiment, in a market trend that indicates a push toward the all-time high values, addresses holding less than 1 BTC would be capitulating or selling off their holdings, those with 1 to 100 BTC would continue to grow, while holders of 100+ BTC would be on an accumulation spree.

Potential Bullish Momentum?

Meanwhile, data from IntoTheBlock contrasts this trend of stagnation among holders. Notably, over the last 24 hours, 8.03K BTC has been withdrawn from exchanges, continuing a trend of outflows over the past week and month.

These outflows, totaling 6.29K BTC in the past seven days and 9.6K BTC over the last 30 days, indicate that Bitcoin’s supply on exchanges is shrinking.

BTC Exchange Netflows

A reduction in exchange supply typically leads to reduced selling pressure, which could signal a potential price increase if demand grows.