The landscape of bitcoin demand is undergoing a notable transformation, particularly following the recent U.S. presidential inauguration. The overall spot demand for bitcoin (BTC) has seen a marked decline, which, if it persists, could hinder potential price rallies. A recent report from CryptoQuant highlights this trend by indicating that while bitcoin’s spot demand growth is slowing, large-scale investors are pivoting towards a reaccumulation strategy, loading their portfolios despite the broader market’s stagnation.
Bitcoin’s spot demand growth, a crucial metric for price appreciation, has drastically reduced from an impressive 279,000 BTC recorded in early December 2024 to a far more subdued 75,000 BTC at present. This decline reflects a significant shift in market sentiment, as the momentum has fallen sharply from 1.7 million BTC to a mere 100,000 BTC during the same timeframe. Such reductions in demand are concerning for proponents of BTC, as heightened interest from investors is typically necessary to propel prices upward.
Interestingly, data suggests that large investors are not only maintaining their positions but are actively increasing their bitcoin holdings. Between January 14 and January 17, just prior to the inauguration of President Donald Trump, large investors increased their BTC holdings significantly, witnessing a monthly uptick from -0.25% to +2%. This reversal marks the most substantial growth observed since mid-December, indicating that major players in the market remain confident in bitcoin’s long-term potential, even as retail investors appear to have scaled back their investments.
The contrasting behavior between large and small investors is striking. Throughout the period from November 4 to January 24, the holdings of large investors increased from 16.2 million BTC to 16.4 million BTC, while small investors’ holdings dwindled from 1.75 million BTC to 1.69 million BTC. This substantial divergence showcases the resilience of institutional interest against the backdrop of declining enthusiasm among smaller investors, whose strategies may be more influenced by immediate market volatility and profit realization.
As large investors continue to support the bitcoin market, sell pressure has eased significantly. This decrease is largely attributed to the profit-taking behavior observed in December, when daily realized profits soared to around $10 billion as BTC touched the $100,000 mark. Currently, these figures have declined sharply, with daily realized profits now fluctuating between $2 billion and $3 billion, suggesting a reduction in trading activity as market participants have seemingly completed their sell-offs.
The current dynamics of bitcoin demand paint a complex picture. While spot demand growth is struggling, large institutional investors are stepping in to fill the gap left by smaller investors. However, for bitcoin to regain its momentum and unlock price potential, a resurgence in spot demand is critical. The interplay between large and small investors will likely shape the future trajectory of bitcoin pricing in the coming weeks. As the market stabilizes, the overall sentiment and decision-making of these investor classes will be vital in determining the next chapter for bitcoin.
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