Bitcoin's Fund Concentration Drops 7.3% in Week, Market Uncertainty Rises

Coin WorldSunday, May 18, 2025 9:21 pm ET
1min read

On-chain data analyst Murphy recently posted an analysis of Bitcoin's (BTC) concentration of funds, revealing a significant shift in the market dynamics. From May 7th to May 14th, the concentration of BTC funds dropped from a high of 15.5% to 8.2% within just seven days. This decline suggests that as the price of BTC rises, it is gradually moving away from the concentration zone, which could indicate a bullish trend if the concentration curve continues to decline.

However, the concentration curve around 8.2% suddenly stopped decreasing after May 14th and showed a slight upward turn. This level of concentration is neither significantly high nor low, and it introduces a degree of uncertainty into the market. If the price of BTC falls back into the concentration zone, the concentration curve could rise rapidly again, leading to greater volatility. This scenario is similar to the situation observed on January 23, 2025, where a price correction led to a decrease in concentration from a high point, followed by a midway turn back up and an amplification of price volatility.

Alternatively, the price of BTC could continue to rise, with the concentration curve pausing briefly before continuing its downward trend. This situation is analogous to the annotated situation on November 3, 2024, where the concentration curve paused before resuming its decline. The current pause in the concentration curve, rather than a continuous decline, brings uncertainty to the market direction. It is challenging to predict whether the market will be bullish or bearish based on a single indicator. However, the concentration curve suggests that the market is likely to choose a direction of volatility once again. When the concentration reaches a certain height, considering a long position on volatility would be a strategic choice. It is important to note that the market views shared are for learning and communication purposes only and are not investment advice.