Bitcoin's Retail Hype Masked by Whale Moves and ETF Divergence

Recently, the buying pressure for Bitcoin (BTC) in the spot market has remained constrained despite notable net inflows into exchange-traded funds (ETFs). This divergence between ETF flows and spot market exposure has sparked discussions among investors and analysts about the underlying dynamics driving BTC’s price action and investor sentiment. Chain analysis indicates a fragmented ownership structure, with a large number of small and medium-sized BTC holders, which may suggest limited short-term market-moving power from retail investors.

According to on-chain data, the number of Bitcoin wallets on the blockchain exceeds 55 million, with a significant portion holding between 0.1 and 1 BTC. These wallets are likely held by individual retail investors and represent the broader participation of everyday users in the cryptocurrency market. In contrast, wallets holding between 10 and 100 BTC are typically associated with early adopters who have been accumulating Bitcoin since the early days of the market. These addresses have historically contributed to price stability, as they tend to hold for the long term.

Notably, the number of wallets with balances below 0.001 BTC is considerable, but these are often attributed to micro-holding accounts or wallets used for small transactions and are considered to have minimal impact on broader market dynamics. While the exact proportion of these addresses that belong to users in China is not specified, global trends indicate a substantial number of active cryptocurrency users in the region.

Global adoption trends also paint a broader picture of Bitcoin’s expanding user base. A report by Triple-A suggests that global cryptocurrency users will reach 562 million by 2024, representing a 34% increase from 420 million in 2023. This growth is largely driven by increasing digital literacy and the integration of cryptocurrency into financial platforms and services. In China, estimates indicate that at least 100 million individuals are involved in the cryptocurrency space, with a significant portion of their capital coming from domestic sources.

Despite the growing number of users, the recent movement of a large Bitcoin wallet—believed to contain 80,000 BTC—has drawn attention to the potential influence of “whales” or large institutional holders. This particular wallet had remained dormant for over 14 years before being activated. While such activity often causes short-term market jitters, it is important to note that large-scale transactions are frequently executed off-exchange through over-the-counter (OTC) trades, which tend to have a more muted effect on public market prices.

Analysts emphasize the importance of monitoring both ETF flows and on-chain data to better understand market sentiment and capital flows. While ETF net inflows suggest continued institutional interest, the lack of corresponding buying pressure in the spot market highlights the potential for market divergence. Investors are advised to consider these factors alongside broader macroeconomic conditions and regulatory developments when making investment decisions.