Key Points
- Bitcoin’s trading volume has declined by 62% over the past week, indicating a decrease in demand and participants.
- CryptoQuant analyst, Burak Kesmeci, suggests that Bitcoin needs to exceed 54 million individual investors for the price to rise.
Bitcoin [BTC] saw a significant market correction over the past week, with a sharp decrease in trading activities. The trading volume dropped by 62%, indicating less demand and fewer participants.
Analysts are now discussing the importance of individual investors for a Bitcoin rally. CryptoQuant analyst Burak Kesmeci, in particular, suggests that Bitcoin needs more than 54 million individual investors to rally.
Significance of 54 Million Individual Investors
Kesmeci’s analysis suggests that the key condition for a Bitcoin bull rally is an increase in the number of individual investors. Specifically, Bitcoin requires more than 54 million individual investors for a price increase.
The number of individual investors rose for 12 months after falling to 43 million in January 2023. It increased to 52.4 million, a 22% rise, but declined to 51.6 million in February 2024 after the approval of ETFs.
However, the number of individual investors increased during the March 2024 rally and peaked at 54.14 million in June. Since then, the number has been declining. Historically, Bitcoin’s price has been closely correlated with the number of individual investors.
Decline in Bitcoin Participants
Kesmeci’s analysis implies that an increase in investors is essential for a Bitcoin rally. This suggests that new entrants into the Bitcoin blockchain are crucial for price appreciation.
However, Bitcoin is currently experiencing a decline in the number of participants. For instance, Bitcoin’s daily active addresses have dropped from 1.1 million to 899k over the past week, indicating fewer new investors.
Furthermore, Bitcoin’s transaction count has also decreased from 834k to 598k over the past week, suggesting lower demand for Bitcoin as fewer investors are using the blockchain.
As observed, Bitcoin is experiencing a decrease in the number of participants, which usually results in a market correction. If this trend continues, Bitcoin’s price might further decline to $65,757.
