Bitcoin Rally Faces Headwinds as Retail Interest Drops 20%

Bitcoin’s recent rally is encountering obstacles as retail interest wanes and previously dormant coins re-enter circulation. Long-term Bitcoin holders are becoming more dominant as new investor inflows remain subdued. The increasing Bitcoin Coin Days Destroyed (CDD) metric, which measures the movement of older coins, suggests heightened volatility amid diminishing on-chain support. This metric climbed 2.09% to 26.1 million, indicating that older coins are on the move. Historically, a rise in CDD has aligned with distribution phases, where long-held Bitcoin enters circulation for profit realization. This supports the observed outflow of long-term holders and growing 6–12 month activity. If the trend persists, Bitcoin could face overhead pressure from gradual sell-offs by experienced investors seizing gains near peak levels.

Bitcoin’s Stock-to-Flow Ratio dropped by 20%, suggesting its scarcity premium is weakening. The S2F model, which historically underpinned long-term bullish narratives, now reflects diminished conviction. When scarcity weakens amid low new demand, price appreciation becomes harder to sustain. However, exchange reserves dropped by 1.83% to $258.53 billion, indicating fewer coins are available for immediate sale. While this often suggests reduced sell-side pressure, it can also imply shrinking liquidity. With fewer coins on exchanges, volatility may increase if demand abruptly changes. Moreover, the absence of significant inflows from retail buyers exacerbates the liquidity risk.

The BTC/USDT Liquidation Map showed a massive short squeeze zone sitting between $107K and $113K. If Bitcoin clears the $107K level, the ensuing short squeeze could trigger a sharp upward spike. However, leverage on long positions appears modest, suggesting that bulls remain cautious. This cautious sentiment aligns with reduced new investor activity and rising CDD. Consequently, any potential upside may be temporary unless broader market engagement strengthens.

Bitcoin’s recent surge appears driven more by internal cycling among existing holders than genuine demand expansion. The rise in CDD, drop in S2F, and weakening new investor inflow all point to an aging rally. While short liquidation clusters provide near-term upside potential, long-term sustainability hinges on renewed interest from fresh capital. Unless the share of new investors begins to grow, Bitcoin risks entering a stagnation or correction phase—despite temporarily bullish triggers.

As Bitcoin navigates these market dynamics, the interplay between long-term holders and new investors will be pivotal. Without a resurgence of retail interest, the current rally may lose its momentum, leading to significant consequences for the cryptocurrency’s price trajectory. The market's focus will be on whether new investors can re-enter the scene and sustain the rally, or if the current trend of internal cycling will lead to a correction.