Since the shift in U.S. presidential leadership, the demand landscape for Bitcoin has experienced notable changes. Initially, after the inauguration, there was a palpable decline in spot demand growth. This slowdown is particularly concerning, as an increase in spot demand is critical for Bitcoin (BTC) to achieve a price jump. Current metrics indicate that while overarching demand persists, its momentum appears to be waning. Observations from industry analysts, particularly from CryptoQuant, reveal that the surge in demand needed for a robust market rally has not materialized, leaving many wondering about the future trajectory of Bitcoin’s price.
Despite the stagnation in spot demand growth, large investors appear undeterred, entering what has been termed a reaccumulation phase. This cohort is seen actively boosting their portfolios, a strategy that may suggest a bullish outlook in the long term. Importantly, even as the apparent demand continues to rise, the rate of growth has dropped significantly—from an impressive 279,000 BTC in early December to a mere 75,000 BTC currently. This stark decline in demand momentum points to a market correction, prompting discussions about economic factors affecting Bitcoin trading dynamics.
A closer examination of large and small investor activities reveals a diverging trend. Between January 14 and 17, just before Donald Trump’s inauguration, large investors ramped up their holdings, shifting monthly percentage gains from -0.25% to +2%. This spike represents the highest increase in large investor engagement since mid-December and signifies their crucial role in shaping Bitcoin price movements post-election. Contrarily, during the same timeframe, small investors have reduced their stakes—total holdings for this group dropped from 1.75 million to 1.69 million BTC.
Market dynamics have also shifted concerning sell pressure, as a significant portion of assets was liquidated during the December rally when Bitcoin soared near the $100,000 mark. At that time, daily realized profits peaked at an extraordinary $10 billion. However, the current average has plummeted to between $2 billion and $3 billion, indicating a completed cycle of profit realization and significantly reduced sell pressure. This decline suggests that many traders have opted to hold, leading to a stabilization of the market.
The Traders’ On-chain Realized Profit Margin metric, which provides insights into traders’ profit-making capabilities, further underscores this shift. After reaching inflated levels of around 60% in November-December, this figure has dropped close to zero as of mid-January. This dramatically low realized profit margin points toward a tightened selling environment, as traders now perceive diminished gains from offloading their positions. The implications of all these trends suggest that without a resurgence in fundamental demand, Bitcoin may face continued price stabilization, creating a cautious atmosphere among market participants.
While large investors are actively reaccumulating, and the apparent demand continues to grow, slower rates of expansion and the decline in sell pressure present a complex landscape for Bitcoin’s potential price movements. The decisions made by these investors will likely influence the cryptocurrency’s trajectory in the coming weeks and months.
Leave a Reply