Bitcoin reached $60,000 on Wednesday, its first in over two years, marking a 42% increase this month. It last traded at around $61,500, the highest since November 2021, and is on track for its biggest weekly gain in a year, up more than 18.5% since February 21. But who's driving the rally? Is it institutional investors? Or retail investor?
IntoTheBlock: Retail Investors Are Sleeping on Bitcoin's March
Bitcoin's remarkable ascent past the $60,000 mark recently has surprisingly not ignited the usual fervor among retail investors, a phenomenon observed during its previous surges to record highs.
Bitcoin Search Activity and App Downloads Remains Normal
Crypto analytics firm IntoTheBlock highlighted this trend, pointing to relatively subdued Google search activity and application downloads related to Bitcoin, in stark contrast to the buzz seen in the 2021 bull market.
For instance, during Bitcoin's last peak, the Coinbase app shot to the top of the download charts in Apple's US App Store, reflecting heightened retail interest that is currently absent.
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Volume Transaction and New Adresses
Further analysis by IntoTheBlock reveals that while transaction volumes on the Bitcoin blockchain are on the rise, they still fall short of the highs experienced during 2021's market peaks.
Similarly, the creation of new Bitcoin addresses has stabilized, showing a reduction from the surge associated with the popularity of the Ordinals protocol last year.
Ordinals, which introduced the concept of inscribing non-fungible tokens (NFTs) onto the Bitcoin network, had previously led to increased network congestion and higher transaction fees.
Retail is Still Quiet
Despite the significant price movements of Bitcoin, which has seen nearly a 50% increase in a single month, reaching heights not seen since November 2021, the data suggests a relatively quiet retail sector.
This pattern indicates that institutional investors might be the primary contributors to this rally, especially with the advent of US-listed spot bitcoin exchange-traded funds (ETFs). These ETFs, notably including BlackRock's IBIT, have witnessed over $7 billion in net inflows since their introduction in January, showcasing a strong institutional appetite for Bitcoin amidst its latest surge.
JPMorgan: Retail Impulse Responsible for February Strong Crypto Market Rally
On the other hand, JPMorgan analysts claimed that recent crypto price surge to impulsive actions by individual traders, rather than institutional investment or fundamental market factors, noting a significant rebound in retail interest driving the market's strong performance this month.
On-chain Analysis
JPMorgan analysts have identified the recent crypto rally as being driven by retail investors, evidenced by on-chain analysis of bitcoin flows between small and large wallets, and adjustments for new bitcoin ETFs, which skew holdings towards larger institutional wallets.
AI & MEME Coins
The resurgence of AI and meme tokens in market cap share also signals increased retail interest. This trend mirrors the momentum in equities seen in late 2023, with platforms like Block, PayPal, and Robinhood, along with crypto exchanges such as Coinbase, reporting higher trading activity among retail investors.
The Catalysts of Recent Impulse
Three potential catalysts for this retail surge: the Bitcoin halving event, Ethereum's Dencun upgrade, and the potential approval of spot Ethereum ETFs in the US, although they consider the first two largely anticipated by the market and the latter's approval chances at 50%.
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