Increased Retail Interest in Bitcoin

Retail investor interest in Bitcoin surged in October, with on-chain activity from this group increasing significantly over the past 30 days, nearing levels seen before the all-time high in March 2024, as reported by CryptoQuant.

CryptoQuant’s Retail Investor Demand Change metric indicates that activity from retail investors, which had slowed between June and late September, has picked up throughout October. Analysts noted, "In the last 30 days, retail demand grew by about 13%, highlighting a scenario similar to March when we were close to the last historical high."

Rise in Retail Demand Alongside Institutional Interest

The rising retail demand for Bitcoin parallels an increase in institutional interest, according to CryptoQuant's Head of Research, Julio Moreno. He observed that while retail investors are returning to the market, institutional investors have consistently increased their Bitcoin exposure throughout the year. "This contrasts with what happened in Q1 2024, where demand was primarily driven by larger investors," Moreno stated.

Moreno also pointed out that the current dynamics of retail and institutional demand resemble patterns seen in past Bitcoin market cycles. He recalled that in 2017, retail investors aggressively accumulated Bitcoin after prices surpassed previous all-time highs, continuing their buying as Bitcoin approached $20,000. The recent surge in retail activity may indicate similar renewed optimism.

To assess retail investor demand, CryptoQuant examines several key indicators. One method involves tracking the total Bitcoin held by wallets containing less than one Bitcoin, which has grown from 1.734 million BTC in mid-March to 1.752 million BTC currently, reflecting an increase of 18,000 BTC. Another important metric is the volume of on-chain transactions valued at less than $10,000, providing insight into market sentiment among small, non-institutional investors.

Simultaneously with the uptick in retail demand, institutional interest has been on the rise, notably represented by the increasing inflows into spot Bitcoin exchange-traded funds (ETFs). As of mid-October, cumulative net inflows into spot Bitcoin ETFs exceeded $21 billion. However, after a streak of seven days with positive net inflows, ETF activity turned negative on Tuesday, with the 12 spot Bitcoin ETFs reporting total net outflows of $79.09 million. The outflows were primarily attributed to the Ark and 21Shares' ARKB fund, which experienced $134.74 million in withdrawals.

Bitfinex analysts remarked that while ETF inflows have enhanced confidence in Bitcoin as a legitimate investment option, recent attempts by Bitcoin to surpass the $70,000 mark have faltered despite the accompanying ETF inflows. "We remain cautious, noting that inflows do not always lead to sustained price increases and previous attempts by Bitcoin to break past the $70,000 level, accompanied by substantial ETF inflows, have failed. The historical volatility of Bitcoin prices suggests further fluctuations may occur despite the inflows bolstering confidence in Bitcoin ETFs as viable investment vehicles," Bitfinex analysts concluded.