The recent price fluctuations in Bitcoin have shown the cryptocurrency to be quite resilient, with the digital asset currently treading water near $98,000.
On-chain data paint a picture where significant investor activity has been crucial in keeping the market propped up, despite the apparent lack of enthusiasm from the retail side. Still, if we look closely, the current situation almost presents itself as a “perfect storm” working against Bitcoin, with a trio of headwinds blowing hard that could threaten to take the price down and break that still-rather-amiable support zone.
Our Cost Basis Distribution (CBD) metric helps us understand how #Bitcoin investors respond to downside pressure. Looking at last month’s data, we see why the price found support twice at ~$97.5K – nearly 200K $BTC was accumulated above this level: https://t.co/9YFg95gC4X pic.twitter.com/wMhAdjBNUs
— glassnode (@glassnode) February 5, 2025
Cost Basis Distribution Reveals Strong Buying Activity
A closer look at Bitcoin’s Cost Basis Distribution (CBD) metric reveals why the cryptocurrency has twice found support close to $97,500. Over the past month, nearly 200,000 BTC has been accumulated above this level, with large investors and institutions seemingly defending this price zone. That level of foundation means downward pressure should be minimal for Bitcoin in the near term.
Additionally, investors whose cost basis is above $99,000 have obtained over 150,000 BTC—a trend evident in both weekly and monthly on-chain data. This activity indicates a change in investor sentiment, with more holders moving their cost basis up into the $99,000 range. This price point is now being viewed as a support level, which is key to ensuring Bitcoin’s continued strength at higher valuations.
These accumulation trends indicate that Bitcoin’s present stability above $97,500-$99,000 is steadfast. Also, the short-term holder cost basis is about $92,000. Therefore, the distance between the current market level and this lower threshold seems healthy enough to keep any kind of panic selling at bay for now. Should we, however, fall below the $97,500 level, things could get dicey quickly.
Retail Investors Remain Cautious
Even though larger players have been rapidly accumulating Bitcoin, retail investors have shown little inclination to add to their holdings. Santiment’s on-chain data reveals a consistent decline in the number of addresses holding between 0 and 1 Bitcoin. This seems to indicate that the market’s smaller participants are either taking their short-term profits or sitting on the sidelines, seemingly waiting for more advantageous conditions before they make any moves to re-enter the market.
The sustained bullish momentum often has retail participation as its key driver. The dip from the all-time high of over $69,000 has seen retail investors show a cooling interest in accumulating the asset, with the latest DAA data showing that Bitcoin held by retail investors on a roughly 12-month moving average is down about 30%.
Retail investors don’t seem eager to buy #Bitcoin $BTC yet, as the number of addresses holding 0 to 1 #BTC continues to decline, according to on-chain data from @santimentfeed! pic.twitter.com/VOGHkrMSyw
— Ali (@ali_charts) February 5, 2025
Bitcoin Spot ETFs See Significant Inflows
Even though retail investors are being careful, it’s not stopping Bitcoin from seeing a still-raging institutional interest. Institutional investors keep wanting into Bitcoin, and that’s reflected in how, on February 4, 2023, the net total amount coming into Bitcoin spot ETFs was $341 million. We’re actually now at a point where BlackRock’s ETF for Bitcoin is one of the funds you’re most likely to see Bitcoin in when looking at institutional investment. Indeed, that fund had coming into it, on February 4, $249 million.
The increasing inflows into spot ETFs show that institutional investors are taking advantage of Bitcoin’s price levels and its long-term potential. This collective behavior of investors points to a development in which Bitcoin is coming to be regarded as an asset that can be integrated into portfolios—very much like “digital gold.”
On February 4, Bitcoin spot ETF had a total net inflow of $341 million yesterday, and BlackRock ETF IBIT had an inflow of $249 million. Ethereum spot ETF had a total net inflow of $308 million, continuing its net inflow for 4 consecutive days. https://t.co/59u0BnDSW8
— Wu Blockchain (@WuBlockchain) February 5, 2025
Conclusion
Key investors have been steadily accumulating Bitcoin, and because of that, the cryptocurrency has managed to stay above the key price levels of $97,500 and $99,000. Retail participation in Bitcoin right now is almost nonexistent, but what is providing solid support for the price is the institutional demand we are seeing, particularly through spot ETFs. If this accumulation trend that seems to be in place for Bitcoin by both retail and institutional investors continues, then, in my opinion, the Bitcoin price could stabilize—if it hasn’t already—and could potentially move higher from here. But if it does drop below those key price levels, then I think the price would be in danger of dropping to the next support level.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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Source: https://nulltx.com/bitcoins-price-stability-strengthened-by-key-accumulation-zones/