The momentum of Bitcoin's price has attracted widespread attention as it gradually retraces some of the gains from the past few weeks.
So far, Bitcoin has dropped 7.6% from its historical high of $99,645 set last week. Specifically, at the time of writing, the asset is trading at $92,476, having fallen about 4.6% in the past day.
What expectations will Bitcoin's current downtrend bring?
As Bitcoin's price continues to pull back, a recent analysis by CryptoQuant's BaroVirtual highlights that the Bitcoin reserves across major cryptocurrency exchanges are steadily declining. Analysts say this pattern indicates that the market is in a 'bull market.'
The analyst compared it to the situation from March to November 2020, noting that there was a similar decline in forex reserves at that time, followed by a significant influx of funds in December 2020, which drove up buying pressure.
The conclusion is that the current decline in forex reserves indicates that participants who missed earlier accumulation opportunities may now be entering the market before the next price surge.
BaroVirtual pointed out:
Retail traders have not yet joined the market.
Meanwhile, although institutional investors and high-net-worth individuals seem to dominate the current market, retail traders appear to be lagging behind.
Another CryptoQuant analyst named Woominkyu explained this trend, noting that the Korean Premium Index (a key indicator of retail participation) remains below -0.5. This figure underscores the limited activity of retail participants during the ongoing rally.
Woominkyu stated that the Korean Premium Index has historically seen significant increases before Bitcoin's price peaks. He emphasized that monitoring this index can provide important insights for identifying potential market tops.
It is noteworthy that retail traders are notably absent from the recent cryptocurrency rebound, as their eventual participation could lead to increased buying pressure and potentially drive up the price of Bitcoin.
At the time of writing, the cryptocurrency market is facing a massacre, with the global cryptocurrency market capitalization dropping nearly 6% in the past day to the current $3.34 trillion.
According to CoinGlass, 206,491 traders have been liquidated in the past 24 hours, with the total liquidation amount in the cryptocurrency market approximately $624.99 million.
