After experiencing a period of declining transaction volumes from retail investors, Bitcoin’s (BTC) retail on-chain activity is exhibiting signs of revival. This development might indicate a shift from a risk-averse market sentiment to a more risk-on approach.
Will Bitcoin Benefit From Rising Retail Participation?
In a recent analysis by the on-chain analytics platform CryptoQuant, it was observed that BTC transactions under $10,000 have been on the rise. This trend is significant as it reflects a change in the market’s sentiment, suggesting a move from cautiousness to a willingness to embrace risk.
Transactions under $10,000 are a useful metric for gauging retail activity. Unlike institutional transactions, which are primarily driven by fundamental analysis and long-term strategies, retail transactions are often influenced by market sentiment and current news events.
The analysis highlighted that Bitcoin’s retail demand struggled to recover following the cryptocurrency’s all-time high in March 2024. However, in the past 30 days, retail demand has seen a resurgence, climbing by 13%, which indicates potential for further growth.
During the same timeframe, BTC saw a price increase of approximately 7%, rising from $63,142 on September 22 to $67,346 by October 22. The simultaneous rise in both retail on-chain activity and BTC’s price suggests a possible upside for the cryptocurrency in Q4 2024.
Bitcoin’s rapid recovery, along with other cryptocurrencies, following geopolitical tensions such as Iran’s offensive against Israel earlier this month, further signals a return to risk-on behavior in the digital asset market.
It’s important to note that while retail on-chain activity had decreased over the past four months, institutional investors maintained a high volume of transactions and absorption of coins. This recent uptick in Bitcoin activity is drawing small investors back into trading, indicating a potential reduction in risk aversion.
Is A Q4 2024 Rally On The Horizon?
The resurgence of Bitcoin’s retail on-chain activity is a promising development, suggesting a renewed interest from retail investors in the leading digital asset. However, the upcoming US presidential elections could introduce more volatility to BTC’s price.
According to various crypto analysts and trading firms, the potential for a crypto rally in Q4 2024 largely depends on the election results. Bitwise CIO Matt Hougan recently noted that any outcome other than a Democratic sweep could propel BTC to $80,000 by the end of 2024.
Bitcoin’s dominance, which measures its share of the overall crypto market, recently reached 58.9%, marking a new cycle-high. While this is an encouraging sign for BTC’s future price trajectory, a further increase in dominance could negatively impact the performance of altcoins. Therefore, Q4 2024 might witness a new all-time high for BTC but potentially subdued returns for altcoins.
It is also crucial to consider that the renewed retail demand for digital assets might not be uniform across all regions. For instance, in South Korea, BTC is trading at slightly lower prices compared to global prices due to a negative ‘kimchi premium,’ indicating low domestic investor sentiment toward digital assets.
At the time of writing, BTC is trading at $67,346, reflecting a 1.4% decrease in the past 24 hours.
