Key Points
- Bitcoin’s (BTC) trading volume has declined by 62%, indicating a decrease in demand and participants.
- The number of individual investors in BTC must exceed 54 million for a price rally, according to CryptoQuant analyst Burak Kesmeci.
Bitcoin’s (BTC) market has seen a significant correction over the past week. This was marked by a substantial decrease in trading activities, with trading volume falling by 62%. This suggests a decrease in demand and a lower number of participants in the market.
The Role of Individual Investors in BTC Rally
Analysts have been discussing the importance of individual investors for a BTC rally. One such analyst, Burak Kesmeci from CryptoQuant, suggests that for a rally to occur, the number of individual BTC investors must exceed 54 million.
Kesmeci’s analysis suggests that the key condition for a Bitcoin bull rally is an increase in the number of individual investors. He believes that the number of individual investors in BTC needs to surpass 54 million for the cryptocurrency to see a price increase. This number had increased over a 12-month period after dropping to 43 million in January 2023, peaking at 54.14 million in June 2024. However, since then, the number of individual investors has been on a decline.
Historically, there has been a close correlation between an increase in the number of individual investors and BTC prices. For instance, when the number of individual investors increased in January 2023, BTC’s price surged by 300%. However, after reaching a peak in June 2024, the number of individual investors began to decrease, and this was followed by a decline in Bitcoin’s price.
Decline in Bitcoin’s Number of Participants
Kesmeci’s analysis suggests that an increase in the number of investors is essential for a BTC rally, indicating that new entrants into the BTC market are vital for its price appreciation. However, Bitcoin is currently experiencing a decline in the number of participants.
For example, the number of daily active Bitcoin addresses has decreased over the past week, dropping from 1.1 million to 899k. This suggests that fewer investors are entering the market, which indicates a decrease in the number of individual investors.
In addition, Bitcoin’s transaction count has also declined over the past week, dropping from 834k to 598k. This suggests a decrease in demand for BTC, as fewer investors are using the blockchain.
As observed, BTC is currently experiencing a decline in the number of participants. This typically results in a market correction, as seen over the past week. If this trend continues, BTC’s price might decline further.
