Are Bitcoin Retail Traders Back In The Market? On-Chain Data Suggests So

Bitcoin started the month of July with a convincing rally to the upside, suggesting a sustained bullish sentiment amongst investors from its performance by the end of June. The upward rally, however, cooled off following the release of positive employment data by the United States.

Traders might have expected this data to be typically bullish, but that has hardly been the reality for the Bitcoin price. Nevertheless, a certain investor cohort, as shown by on-chain revelation, has decided to return to the market and bet on the world’s largest cryptocurrency by market capitalization.

Retail Investors In, Long-Term Holders Out?

In a Quicktake post on the CryptoQuant platform, on-chain analyst Amr Taha highlighted the increasing divergence between retail and institutional behavior in the BTC market. 

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Taha started by pointing out that Binance Bitcoin futures Open Interest (OI) has remained below $11.5 billion. The crypto pundit explained that this price level has been acting as strong resistance, as Bitcoin traders have repeatedly closed positions near this price threshold.

Interestingly, these levels are very close to the same price region around which resistance was observed on June 10th. Taha stated that this could mean the bullish momentum is beginning to wane for the flagship cryptocurrency.

On another hand, short-term holders (STH), who are typically the retail traders, have increased their exposure to the market by about 382,000 BTC. This can only mean that there has been renewed retail interest in the flagship cryptocurrency. 

Contrary to the short-term holders’ actions, the long-term holders (LTH) reduced their holdings by an amount similar to the STH exposure. Taha explained that this could be a result of profit taking or risk management within this investor class.

In essence, the retail investors are “buying the dip,” while the more experienced are seemingly reducing their risks.

Bitcoin Whales Enter Distribution Phase

Also supporting the conceived idea of caution in institutions and whales, Taha reported that large holders (holders with over 10,000 BTC) offloaded about 12,000 BTC on the 3rd of July. This kind of move, according to the analyst, signals potential profit taking or perhaps strategic reallocation. Besides what they might signify, large transactions tend to have a substantial impact on market dynamics, as significant amounts of BTC are involved in each trade.

However, the large holders were not the only profit takers. According to Taha, mid-sized whales (those holding 1,000-10,000 BTC) also shed some of their holdings. From June 30th, approximately 14,000 BTC were sold by this class. Deducible from these transactions is the idea that the whales seem to be in their distribution phase, either because they anticipate further bearish momentum or await better positioning opportunities. 

If macro conditions remain favorable, the Bitcoin market could resume its bullish rally, but this ultimately falls on the renewal of larger players’ confidence. For now, the road ahead remains uncertain. As of this writing, Bitcoin is valued at $108,152, with no significant movement in the past 24 hours. 

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Featured image from iStock, chart from TradingView