Bitcoin’s rally defies retail exit – Here’s what’s driving BTC

Key Takeaways

Why has retail volume been dropping for over a year?

The small market participants are likely exhausted, even though BTC has climbed higher, as there is always something newer and shinier to chase and potentially lose money.

Can this affect Bitcoin’s price trends?

It might not significantly impact trends, as the growing ETF volumes meant retail was not wholly disappearing.

Retail participation has been fading in recent weeks of the Bitcoin [BTC] bull run.

In a post on X (formerly Twitter), crypto analyst Axel Adler Jr pointed out that the small transaction segment (up to $1k) experienced a downtrend in volume since spring 2024.

Source: Axel Adler Jr on X

This section can be thought of as retail participants. The amplitude of the spikes in volume has been falling over the past year, even as the price of Bitcoin made higher highs. The 30-day Average Volume was $106 million.

This divergence reflected retail exhaustion even as prices climbed higher, a stark difference from the previous two cycles. Will this negatively impact BTC in the coming months?

Move aside, retail, institutions are here

Bitcoin maximalists who ardently believe in Satoshi’s vision of a decentralized, peer-to-peer digital cash system will be disappointed with how the system has changed in recent years.

The arrival of institutional investors and the evolution of digital asset treasury companies such as Strategy [MSTR] have radically changed the game.

Celebrity-themed tokens, such as YZY Money and Official Trump [TRUMP], were a small part of the swathe of altcoins flooding the market, each promising to be the next big thing. Retail participants have likely become exhausted trying to ride these newcomers to make profits over the past year.

Reduced retail participation likely won’t deter a continued Bitcoin bull run. As mentioned earlier, digital asset treasury companies (DATs) continued to stockpile Bitcoin at a healthy rate.

The past 30 days saw a 4.89% increase in the amount of BTC in treasuries.

Source: Farside Investors

Spot exchange-traded funds were another way to get exposure to BTC. The past week’s inflows showed strong demand, despite the teasing new all-time highs before dipping lower in recent days.

This also pointed to the likelihood that retail investors preferred buying ETFs to holding crypto in their wallets, helping explain the reduced retail activity seen on-chain.

Signs of a sentiment shift among Bitcoin traders

Source: CryptoQuant Insights

In a post on CryptoQuant Insights, analyst Darkfost noted that the selling pressure from derivatives has significantly reduced in the medium term. The highly negative net taker volume in August and September reflected genuine bearish sentiment in the derivatives market.

At the time of writing, the taker volume was balanced. This indicated a sentiment shift in the speculative market.

In another post, it was observed that there have been only seven days with positive netflows to Binance over the past month. Together, they reflected bullish market sentiment.