Retail investors were responsible for Bitcoin’s best run since October 2021
Retail investors are piling into Bitcoin despite continued regulation and price uncertainty, according to Barrons.
Since July 13, Bitcoin has been on an upward trend, growing in value by 18%. After reaching a high of $24,700 on July 30, the uptrend was cut short.
Nonetheless, this performance was BTC’s best form since October 2021.
Bitcoin price action slows
After the $24,700 peak, BTC has traded relatively flat, but closed at a lower low each successive day. Analysts attributed the loss of upward momentum to rising tensions between the US and China over House Speaker Pelosi’s visit to Taiwan.
Further headwinds have arrived on the macro front. On August 4, the Bank of England announced that the UK will enter a recession in the last quarter of this year.
In response, growth forecasts for the coming year have been cut. And to combat spiraling inflation, which is forecast to rise to 13%, the central bank also raised interest rates by 0.5%, bringing the base rate to 1.75% – marking the most significant increase since 1997.
Crypto markets did not immediately react, with the price of Bitcoin hovering between $22,700 and $23,000 on the announcement.
US retail investors are piling into BTC
Marcus Sotiriou, analyst at digital asset brokerage GlobalBlock, said: “Retail is buying Bitcoin at the fastest rate in history,” particularly US retail investors, suggesting this was the reason for Bitcoin’s recent run of good form.
In support of this statement, Sotiriou referred to several metrics, starting with the Coinbase Premium Gap (CPG), which refers to the difference in BTC price between Coinbase and Binance.
Given that Coinbase is the largest US exchange, prices on the platform can be taken as an indicator of US demand relative to elsewhere. Analysis of CPG showed a discount of $25 on July 12. During the month, the discount became a premium for the first time in several months.
In late July, CPG showed a $14 premium for Coinbase users – the most significant amount since BTC traded at $40,000 around May.
In addition, data from Messari showed a change in the dynamic between whales and small accounts. Bitcoin in the largest 1% of accounts fell from 17.34 million to 17.32 million in July. Conversely, Bitcoin in accounts with more than $10,000 increased from 18.2 million to 18.4 million in the same period.
A similar pattern has played out with derivatives. CME microcontracts, valued at 10% of the Bitcoin price ($2,300) and traded by retail traders, saw a big jump in open interest from 15,998 to 24,960 since early July.
In contrast, standard contracts, valued at 5 Bitcoin ($115,000) and favored by institutions, saw a slight rise in open interest from 13,466 to 13,480.
