BITCOIN’S RETAIL INVESTORS HAVE THIS CRUCIAL ROLE TO PLAY

Bitcoin has registered multiple ATHs over the past few weeks. However, since crossing the $40,000 threshold, the bullish momentum has slowed down quite a bit. The asset is still amidst a bull run but many were speculative and uncertain regarding whether BTC has reached a top or not.

Now, the importance of long-term holders in the current rally is undeniable. Hodling sentiment has been evident since mid-2020 and the BTC supply taken off-exchanges has continued to rise over the past few months.

Now, the macro bull-cycle begins after a reduction in on-chain supply has led to a supply squeeze. The chart above indicates the supply squeeze that was initiated by aggressive accumulation, however, for the next phase of the rally, short-term holders might have a greater role.

Historically, the retail investor’s interest has only peaked after BTC’s price rise or the market sentiment becomes unavoidably positive. The current supply squeeze triggered such a scenario and once short-term holders have accumulated a good amount, they become an important market driver.

Since short-term holders possibly accumulated Bitcoin when it was closer to the current market price, they are more responsive whenever BTC’s value undergoes a rally or correction.

If we compare the current macro-cycle alongside the 2017 one, we are possibly in the middle of the transition where the momentum shifts from long-term holders to short-term holders.