Since the inauguration of the United States President, the momentum behind Bitcoin (BTC) demand has experienced a notable deceleration. Bitcoin’s price is notoriously linked to the growth in spot demand; thus, a stagnation in this area raises significant concerns for traders and investors alike. A recent report by CryptoQuant underscores the crucial need for robust demand growth to usher BTC into a more favorable price trajectory. While Bitcoin’s apparent demand metrics remain in positive territory, the pace of growth has distinctly slowed down. For instance, in early December 2024, demand stood at approximately 279,000 BTC but has now dwindled to just 75,000 BTC.
Interestingly, although spot demand is lethargic, we are witnessing a fascinating shift among large-scale investors. This group has entered a reaccumulation phase, significantly increasing their BTC holdings despite the broader market’s stagnation. Between January 14 to 17, just ahead of Donald Trump’s inauguration, large investors notably escalated their Bitcoin acquisition efforts. The percentage increase in their holdings grew from a marginal -0.25% to +2%, marking an encouraging trend amidst overall tepid demand growth. This indicates that institutional and larger individual investors perceive opportunities that smaller investors may overlook.
Contrasting the activities of larger players is the behavior of smaller investors, who have generally reduced their holdings. Data shows that the total holdings of sizable investors have spiked from 16.2 million BTC to 16.4 million, while smaller investors saw their stash shrink from 1.75 million BTC to 1.69 million BTC during the same timeframe. This divergence illustrates a fundamental shift in market sentiment and poses the question of market stability, especially as larger investors increasingly dictate Bitcoin’s demand dynamics.
A critical indicator of market health is the profit realization among traders. During the December 2024 surge, when Bitcoin reached heights close to $100,000, traders capitalized on profits that skyrocketed to an astonishing $10 billion in daily realized sales. However, trends have suggested a drop in daily realized profits, now oscillating between $2 billion to $3 billion, indicating a natural market cooling. This decline signifies that the rush to liquidate holdings for profit has generally subsided, meaning pressure to sell BTC has concurrently lessened.
Analysts have noted that the declining realized profit margin among traders is a signal that less profit is available from further sales, fostering a more stable environment for Bitcoin’s price to hover. A near-zero profit margin reflects diminished urgency to sell among traders, which historically aligns with a potential price floor for Bitcoin. However, until we see a significant rebound in overall demand growth, prospective bullish movements may remain muted. The interplay between large-holder strategies and smaller investor behaviors will continue to shape Bitcoin’s outlook, making it essential for market participants to remain vigilant and adaptable in this ever-evolving landscape.
