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Bitcoin’s retail demand falls 17%; Is this a precursor to a massive rally?

Bitcoin's retail demand falls 17%; Is this a precursor to a massive rally

The average demand for Bitcoin (BTC) among retail investors has plummeted to its lowest point in five months, echoing levels last seen in January.

Notably, this previous low was followed by a significant 75% surge over the subsequent two months.

According to data shared by CryptoQuant author Axel Adler on June 10, the average monthly change in demand for Bitcoin among retail investors—those with up to $10,000 in transfer volume—has fallen to negative 17% over the last 30 days.

Adler pointed out that a similar previous drop to negative 18% in January saw Bitcoin’s price increase from $40,000 to $70,000, fueled by the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States. This surge pushed Bitcoin to its mid-March all-time high of $73,679.

In May, Adler used the same metric to show that demand had decreased by 31% over the 17 days before May 24, reaching a negative 14.50%. 

He pointed that this drop was likely due to increased interest in GameStop (NYSE: GME) and Ethereum (ETH), possibly because of the initial approval of spot Ether ETFs.

In stark contrast to the declining retail interest, Bitcoin’s trading volume for ETFs has seen a notable increase.

According to a report by Santiment, the combined trading volume for the top seven largest Bitcoin ETFs hit around $2.89 billion, its highest level since mid-May.

This surge indicates a renewed interest among investors, possibly reacting to market dips. U.S. spot Bitcoin ETFs, however, have seen net outflows of $200 million, continuing a trend from Monday that ended a 19-day streak of net inflows.

Additionally, Mike Alfred, a value investor and active crypto commentator, highlighted a disconnect between Bitcoin’s price trends and the decline in organic search engine traffic on Google. 

Despite a spike in searches from Q4 2023 until early January 2024, the trend has been downward since then. This initial spike was primarily due to the U.S. Securities and Exchange Commission (SEC) preparing to approve the launch of spot Bitcoin ETFs.

The substantial inflows into Bitcoin ETFs, coupled with low retail engagement, suggest that institutional interest remains robust. This momentum, combined with potential CPI changes, could indicate that the market is still in the early phase of its next growth cycle. 

Analysts and investors will be closely monitoring for signs of increased retail participation, which could signal a broader market upswing.

BTC 7-day price chart. Source: Finbold

At press time, Bitcoin is trading at $67,412, reflecting a 1.4% decrease in the last 24 hours, while trading volume has surged by 8% to reach $31.3 billion, with a market cap of $1.32 trillion.

While the current low retail demand may seem concerning, historical trends andongoing institutional interest suggest that Bitcoin could be poised for significant growth in the coming months.

As always, careful analysis of market indicators and a long-term perspective will be essential for navigating the dynamic world of digital assets.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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