Forex Analysis & Reviews: 05.04.2022 - Bitcoin: two reasons why the...

05.04.2022 06:12 PM

Bitcoin: two reasons why the share of retail holders of cryptocurrencies is increasing in the market

Continuation of Bitcoin consolidation in the range of 45,500-48,000 dollars is a sign of accumulation of positions. At the same time, as some researchers note, a significant role belongs to retail holders, who have become more active since the beginning of the year.

In a tweet on April 4, William Clemente, a leading analyst at Blockware, reported a sharp jump in the BTC supply owned by smaller hodlers.

At the same time, there has been an "exceptional" surge in FOMO (fear of lost profits) among retail investors since the beginning of this year. Retail investors are those who own an amount of 1 BTC or less.

The share of retail crypto investors has grown

According to the network analytics company Glassnode, these smaller players have dramatically increased their share of the total Bitcoin supply in 2022.

Clemente noted that earlier the increase in supply from retail owners of bitcoin traditionally coincided with the peaks of asset prices. This was most likely caused by profit-taking. But now, given the recent dynamics of the main cryptocurrency, it looks different.

The Blockware analyst notes that this is a really interesting situation since retail investors holding amounts of 0-1 BTC are currently buying cryptocurrency at the second-highest rate in history.

"Looking at retail assets, most of the spikes coincided with macro maximums, but in some cases, they bought strategically. This surge is an exception."

Bitcoin as a means of saving instead of fiat currency?

Each segment of retail investors with amounts from 1 BTC to the smallest group of 0.001 BTC increased its market share over time. But, as Glassnode shows, there has been a sharp jump since mid-February.

Now investors owning from 0.1 BTC to 1 BTC own a total of almost 800,500 BTC.

"Either we are doomed, or retail traders decided to use bitcoin as a means of saving and abandoned the fiat system. The optimist in me hopes that this is the second," Clemente added.

As bitcoin has moved out of its 2022 trading range, the volume of profitable supply held by short-term holders - those who have been on the market for 155 days or less - has increased.

Glassnode data shows that short-term holders, whose investment positions are moving from losses to profits, have also become more active during the price peaks in the past years.

Search interest in Bitcoin has fallen

While attention is focused on the habits of investors at an important volume level in the network of about $50,000, however, active attention to bitcoins is still clearly absent.

Google Trends data reflecting worldwide search interest in Bitcoin show less interest than ever since the main cryptocurrency rose to record price highs last November.

This picture on Google hints that the trend is still declining, and the main cryptocurrency is in line for the lowest relative search volume in recent years if the situation continues.