On-chain data shows that demand from retail investors has remained at low levels recently despite Bitcoin’s surge to a new high.
Bitcoin 30-day hashrate demand is at historically red levels
In CryptoQuant Quicktake mailan analyst discussed the latest trend in 30-day change of retail investor demand in Bitcoin, which is an on-chain indicator that, as its name suggests, calculates the demand for the cryptocurrency existing among retail investors.
Retail investors are the smallest holders on the network, so their transactions tend to be small in size. Therefore, in order to track activity related to this group, the metric uses the transaction volume for moves worth less than $10,000.
Below is a chart of the indicator shared by Quantitative that shows the trend in retail investor demand for Bitcoin over a 30-day period over the past few years.
The value of the metric appears to have seen a sharp fall in recent days | Source: CryptoQuant
As can be seen in the chart, retail investor demand for Bitcoin indicated a sharp positive monthly change during the bullish price surge beyond $100,000 that occurred last year.
This means that the size of these small holdings has risen sharply. This was nothing unusual, as this group tends to find sharp price action exciting, so transfer activity generally spikes during rallies.
However, the magnitude of the rise was extraordinary, surpassing any other rise in the index over the past few years. From the chart, it appears that this peak in the indicator occurred near the price top.
In fact, all of the previous big rallies highlighted by the analyst also occurred around some sort of top in the cryptocurrency. Therefore, it appears that a high level of fear of missing out (FOMO) on the part of retail investors is bearish on price appreciation.
Since last year’s spike, retail investor demand for Bitcoin has seen a 30-day change go through a sharp reversal. Not only has the gauge now fallen into negative territory, but it has also fallen to a historic low of -22%.
Interestingly, the downward trend of the index continued despite the price rising to a new all-time high (ATH) witnessed by Bitcoin. As such, it appears that retail investors have yet to start returning to cryptocurrency.
Given the historical pattern where FOMO has proven to be a killer to rallies, this lack of optimism among the retail group may allow the current run to continue for much longer.
Bitcoin price
At the time of writing, Bitcoin is trading at around $106,400, up more than 15% over the past week.
Looks like the price of the coin has seen a continuation of its bullish momentum in the last 24 hours | Source: BTCUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart from TradingView.com