Small investors return after a 4-month break

After failing to break above the $70,000 mark this week, Bitcoin briefly dipped below $67,000 before embarking on a modest recovery.

Despite the brief pullback, the data points to renewed interest from retail investors, which is generally seen as a strong indicator of broader market sentiment.

Bitcoin Retail Income

The latest analysis from CryptoQuant shows a resumption of online retail activity after a four-month lull. One of the key indicators is the volume of on-chain transactions under US$10,000, which reflects the participation of smaller non-institutional investors. These transactions are highly sensitive to market sentiment and often respond more to news than underlying fundamentals, which helps gauge the flow of capital among retail participants.

Over the past 30 days, retail demand has increased by 13%. This is a significant shift from previous months of decreased activity. CryptoQuant’s analysis notes that this level of participation was last seen in March, as Bitcoin neared its latest all-time high.

During this quiet period, whale investors continued to maintain high transaction volume by gobbling up BTC while retail activity declined. The recent rise in Bitcoin prices has renewed interest among small investors, suggesting reduced risk aversion and the potential for further retail growth.

Bitcoin is up 60% this year, rising from $42,280 at the start of the year to $67,000 at press time. In October alone, the asset rose in price by 8%.

Several factors supported this bullish trend. In addition to increased whale activity, investors are increasingly eyeing a potential rate cut by the Federal Reserve in November.

Optimism is further fueled by crypto supporter Donald Trump’s growing chances in the 2024 presidential race. Additionally, the Fear and Greed Index continues to reflect traders’ strong confidence in Bitcoin.

Parabolic phase

A recent tweet by Ted Pillows also offered an optimistic view of the Bitcoin market’s trajectory. He said the downtrend has officially ended, signaling the start of a new phase for BTC holders.

According to the market analyst, the asset has already gone through a period of consolidation and accumulation, suggesting that it could potentially be preparing for a parabolic phase.

Another market analyst, Dr. Magic, noted a steady decline in stablecoin dominance since mid-2024. This trend usually precedes significant price increases for major cryptocurrencies, including Bitcoin. The decline in stablecoin dominance suggests investors believe BTC will rise in value against the US dollar, indicating increased investor confidence and rising risk appetite as the market prepares for its next leg of growth.