Since the recent U.S. presidential inauguration, the landscape of Bitcoin (BTC) demand has changed notably. A crucial factor that contributes to the cryptocurrency’s price movements is its spot demand growth, which has seen a significant slowdown. According to a report by CryptoQuant, the absence of a resurgence in spot demand growth indicates potential challenges ahead for Bitcoin’s price recovery. The data shows that while there has been some expansion in apparent demand, the overall momentum has diminished sharply, declining from 279,000 BTC in early December 2024 to just 75,000 BTC today.
Interestingly, while the general demand shows signs of stagnation, large-scale investors appear to be taking a different approach. These significant players in the Bitcoin market have entered a buying phase, indicated by a reaccumulation of their holdings. Between January 14 and January 17, just prior to the inauguration of President Donald Trump, large investors increased their holdings significantly. The monthly percentage increase in their BTC holdings surged from a marginal -0.25% to +2%. This marks the most substantial uptick since mid-December and highlights a pivotal shift in the dynamics of Bitcoin investment.
Conversely, smaller investors seem to have taken a step back. As large investors ramp up their acquisitions, small investor holdings have decreased, showcasing a divergent trend in the market. Between November 4 and January 24, large investors’ collective Bitcoin holdings rose from 16.2 million to 16.4 million BTC, while simultaneously, the holdings of small investors fell from 1.75 million to 1.69 million BTC.
The fluctuations in investor behavior manifest in varying levels of sell pressure on Bitcoin. Over the past couple of months, Bitcoin’s price experienced a December rally that led many traders to realize profits, reaching daily realized profits as high as $10 billion when BTC neared the $100,000 mark. However, as the market stabilized, these figures dropped significantly to between $2 billion and $3 billion in realized profits, suggesting that traders have largely stopped selling off their Bitcoin.
This reduction in selling pressure is also reflected in the realized profit margins among traders. According to CryptoQuant, the Traders’ On-chain Realized Profit Margin fell close to zero in mid-January after reaching nearly 60% during the late November to December surge. This low profit margin suggests limited opportunities for profit-taking, which could further relieve sell pressure on Bitcoin prices.
The current landscape for Bitcoin reflects a complex interplay between large-tier and small-tier investors, impacting overall demand and pricing trajectories. For Bitcoin’s price to witness a significant rally, a renewed surge in spot demand, particularly from smaller investors, will be crucial. As large investors continue to accumulate and sell pressure eases, the market’s response in the coming weeks and months will prove essential to determining Bitcoin’s next moves. The evolving nature of investor behavior and market sentiment will undoubtedly shape Bitcoin’s future trajectory, making a close watch on these dynamics essential for stakeholders.