Original author: Matt Crosby
Original translation: Luffy, ForesightNews
As Bitcoin re-enters a price discovery mode, crypto market participants are curious: has retail FOMO already begun? Will we see the influx of retail investors we observed in previous bull market cycles? We will use active addresses, historical cycles, and various market indicators to study the current state of the Bitcoin market and what it may signal for the near future.
Increased retail interest
One of the most direct signs of retail interest is the number of newly created Bitcoin addresses. Historically, a sharp increase in new addresses often marks the beginning of a bull market as new retail investors flood into the market. However, in recent months, the growth of new addresses has not been as rapid as expected. Last year, we saw approximately 791,000 new Bitcoin addresses created in a single day, indicating strong retail interest. In contrast, while the current number of new addresses has slightly increased, we are still lingering at relatively low levels.
Figure 1: The number of new addresses on the Bitcoin network has started to rise
Google Trends also reflects this interest. Although the search volume for 'Bitcoin' has been increasing over the past month, it is still far below the peaks of 2021 and 2017. Retail investors seem to have shown new curiosity, but it has not yet reached the frenzied excitement of FOMO.
Figure 2: The search volume for 'Bitcoin' on Google is also rising, but still remains relatively low
Changes in holders
We are witnessing a transfer of Bitcoin from long-term holders to newer short-term holders. This change in supply may suggest the beginning of a new market phase, where experienced holders are taking profits and selling to newer market participants. However, the total number of Bitcoins transferred remains relatively low, indicating that long-term holders have not yet sold off large amounts of their Bitcoin.
Figure 3: The number of Bitcoins transferred to new holders has only slightly increased
Historically, during the last bull market cycle from 2020-2021, we saw a significant amount of capital flow from long-term holders to new investors, driving the subsequent price increase. Currently, this transfer is not apparent, despite the price increase, as long-term holders choose to continue holding their Bitcoin. This reluctance to sell indicates that holders are confident in the potential for further price increases.
Spot-driven rise
A key factor in Bitcoin's latest rise is the spot-driven market, contrasting sharply with previous bull markets that relied on leveraged positions. Open interest in Bitcoin derivatives has seen only a slight increase, in stark contrast to previous peaks. For example, before the FTX collapse in 2022, open interest was quite substantial. A spot-driven market is less over-leveraged, often more stable and resilient, as there are fewer investors facing the risk of forced liquidation.
Figure 4: Open interest in contracts has been declining for a long time, with only a slight recent increase
Whales are accumulating
Interestingly, while the number of retail addresses has not significantly increased, the number of 'whale' addresses holding over 100 BTC is continuously rising. In recent weeks, wallets holding large amounts of BTC have increased by tens of thousands of Bitcoins, valued at billions of dollars. This indicates that even as Bitcoin reaches historical highs, whale investors remain confident in the current price levels.
Figure 5: The number of addresses holding at least 100 BTC has reached its highest level since 2019
In past bull market cycles, we saw whales exit or reduce their holdings near market peaks, but this time we have not observed such behavior. The accumulation by experienced holders is a strong bullish signal, as it indicates confidence in the long-term potential of the market.
Conclusion
While the rise of Bitcoin to historical highs has rekindled interest, we have yet to see signs of retail FOMO. This suggests that we may only be at the beginning stages of this bull market. Long-term holders remain confident, whales are accumulating Bitcoin, and leverage remains moderate, all indicating a healthy market with ongoing upward momentum.
As we continue into the bull market cycle, the market structure suggests that there is still potential for larger retail-driven surges in the future. At that time, Bitcoin will be pushed to new heights.
