Bitcoin Retail Investor Selling Signals Coming Pullback, But There Might Be a Catch

Analysis

As bitcoin (BTC) continues to break record highs and approach the $100,000 level, profit-taking is on the rise. According to Glassnode, $4 billion of realized profit in each of the last two days is a clear indication that some investors are taking profits. However, a closer look at the data suggests that there might be a catch to this pullback.

Key Points

• Retail investors, or “shrimps,” have sold approximately 75,000 BTC ($7 billion) over the past 30 days, the largest distribution from this cohort since bitcoin broke its all-time high in March at above $73,000.
• On the other hand, just under 3 million bitcoin are sitting on exchanges, a two-year low.
• OTC desk balances, though, have seen a rise of roughly 100,000 bitcoin.

Divergence Occurring Between Exchange Balances and OTC Desks

The exchange balance action might tell a different story. Over-the-counter desk balances have continued their strong rise over the second half of 2024, suggestive of large investors cashing in on bitcoin’s surge. Bitcoin’s breach of $90,000 this week led to OTC desk balances rising by another 20,000 tokens, according to CryptoQuant.

Retail Exchange Balances Have Fallen to a Two-Year Low

Retail exchange balances, however, have fallen to less than 3 million tokens, according to Glassnode, the lowest level in two years. This would seemingly be evidence of strong buying interest.

Conclusion

There appears to be a tug of war in the data, with one set indicating sizable retail profit taking similar to the market top earlier this year and another set showing the opposite. As always, the short-term outlook remains cloudy.

Predictions

Based on the analysis, it is likely that the current pullback in the market is not a sign of a major downturn, but rather a healthy correction. With OTC desk balances continuing to rise and retail exchange balances falling to a two-year low, it is possible that large investors are taking profits and retail investors are buying. Therefore, it is likely that the market will continue to move upward in the long term.

Key Takeaways

• Retail investors are taking profits, but this might not be a sign of a major downturn.
• OTC desk balances are continuing to rise, suggesting that large investors are taking profits.
• Retail exchange balances have fallen to a two-year low, indicating strong buying interest.
• The short-term outlook remains cloudy, but the long-term outlook is likely to be positive.

Actionable Insights

• Investors should be cautious and not panic-sell their assets.
• Investors who are taking profits should consider holding onto their assets for the long term.
• Investors who are buying should consider diversifying their portfolio and not putting all their eggs in one basket.

Evidence

• Glassnode data shows that retail investors have sold approximately 75,000 BTC ($7 billion) over the past 30 days.
• CryptoQuant data shows that OTC desk balances have continued their strong rise over the second half of 2024.
• Glassnode data shows that retail exchange balances have fallen to less than 3 million tokens, a two-year low.