Onchain trackers reveal that retailers purchasing 1 BTC or less are ramping up at the fastest pace in Bitcoin’s history.
Retailers are Ramping Up on Bitcoin
In a tweet shared on July 20, an analyst noted that the current rate of retail Bitcoin acquisition was in early 2018 levels when prices were trending at around the $20k mark. However, based on historical performance, retailers FOMOed in then, purchasing the coin at cyclic highs before prices tanked to as low as $3.2k at the depth of the 2018 bear market.
Compared to early 2018 price levels, BTC could be at a cyclic bottom at spot rates. According to price trackers on July 21, Bitcoin prices are roughly 25 percent from 2022 lows, recovering after posting deep losses that saw the coin drop by over 70 percent from November 2021 peaks. The refreshing bounce to over $24k on July 20 coincided with retailers’ expansion in coin purchases. This development may hint at improving sentiment and possible higher highs in subsequent sessions.
Will Retailers Sell after the U.S. FED Raise Rates?
Even so, it is still unclear whether retail accumulation signals a shift in the trend and a welcomed recovery that may propel BTC back to the $30k zone. Instead, factoring in macro factors, especially the U.S. FED’s expected hike of interest rates to curb runaway inflation, it is likely that the cryptocurrency and the broader financial markets may take a hit, forcing digital assets down.
Based on economists’ forecasts, the central bank will likely increase the U.S. fund rates by 75 bps even though the probability of a triple-digit rise by 100 bps is increasing. This is after U.S. inflation rose to 9.1 percent year-to-date, the highest in 40 years. Considering how the crypto market performed earlier, interest rate hikes could see BTC prices recoil, subsequently impacting trading volumes, denting trade confidence, and forcing “weak hands”, primarily retailers, to liquidate for cash.
The CEO of CryptoQuant, an on-chain tracking platform, Ki Young-Ju, is also skeptical that the current accumulation amongst retailers would be causative, forcing prices higher. Specifically, the executive noted a few flaws in the wallet address statistics used for analysis, noting that addresses with less than 1 BTC also included “one-time used mixer wallets alongside retail investors” for concealing transactions. In his preview, these addresses were most likely used for money laundering or were part of over-the-counter deals.
Bitcoin Price Movement a Major Influence on Retail Purchase Behavior
The broader crypto community is nonetheless keeping a close eye on Bitcoin’s short to medium-term performance. Despite the USD value of the digital asset shrinking in the last seven months, the coin’s utility remains high. Therefore, the coin’s recovery will most likely draw in more holders. Most will be accumulating in anticipation of capital gains, riding with the rising crypto tide.
As reported, Tesla, who had purchased $1.5 billion of BTC in January 2021, said it had liquidated 75 percent of its holding in Q2 2022, pocketing $936 million. The electric vehicle manufacturer’s entry into crypto and Bitcoin lifted the coin’s profile, attracting many retail traders and investors to the digital asset.