Retail investors are lagging behind institutions in ramping up purchases of bitcoin (BTC) at the start of October, a month that's historically been bullish for the largest cryptocurrency by market cap.

Net inflows from smaller investors are still at levels considered normal even as bigger investors are increasing purchases. Data from crypto exchanges OKX and Binance, popular with retail market participants, show minimal activity compared with bull markets in 2021 and 2022, and less even than during the bear market of 2019-2020.

The restraint is remarkable because, since 2013, October has only twice ended in the red, chalking gains of as high as 60% and an average of 22% to make it the most best month for investor returns.

In recent months, fewer than 40,000 wallets have been active each day on the two exchanges. That's less even than during the bear market when the BTC was below $10,000 and active wallets numbered around 50,000 a day. The data is in line with other indicators such as popularity of the Coinbase mobile application and on-chain usage, as reported.

“We’re in the middle of a bull cycle, waiting for retail exit liquidity, while new whales are accumulating BTC from old whales,” CryptoQuant founder Ki Young Ju said in an X post Tuesday.

Retail traders, often referred to as individual traders, buy or sell assets for personal accounts. Institutional traders buy and sell for accounts they manage for a group or institution and are colloquially referred to as “whales” due to their sizable influence in the market.

Retail traders are often seen as less informed or more emotion-driven than institutional investors. A significant influx of retail money can indicate bullish sentiment – a general belief is that prices will rise.

However, extremely high retail inflows might signal an overheating market, potentially nearing the end of a rally or market cycle. Early signs of increasing retail inflow might suggest the end of a bear market and the beginning of an accumulation phase.

Sudden spikes in retail buying can sometimes precede market peaks, followed by corrections when these investors start selling out of fear or profit-taking.

Retail traders “usually enter when the BTC price is skyrocketing and reaching an all-time high,” Ki said.