A recent on-chain analysis suggests that Bitcoin is once again showing divergence among its investor cohorts, particularly between institutional players and retail investors. According to this analysis, Bitcoin price may have more room for growth than we have seen so far in this cycle.
Bitcoin ETF flows match Coinbase Premium Index measurements
In a recent one Quicktake post On the CryptoQuant platform, crypto research and education firm XWIN Research Japan delves into the dynamics of the Bitcoin market and notes that a crucial structural shift is emerging.
The relevant indicators in this analysis are the Total Bitcoin Spot ETF Net Inflows, the Coinbase Premium Index and the Fear & Greed metrics. ETF inflows measure the net amount of Bitcoin moving into or out of Spot ETFs; the Coinbase Premium tracks the price difference between Coinbase and other exchanges.
According to XWIN Research Japan, ETF Flows and the Coinbase Premium of (~0.56) show a positive correlation indicating inflows are in line with spot demand. However, XWIN Research Japan points out an important distinction: institutional buying actually precedes ETF inflows, not the other way around as is commonly believed. Hence the rising values of Coinbase Premium, which signal that US investors are buying again, and are the essential drivers of Bitcoin’s price.
Fear and Greed Index Reveals Persistent Fear in Retail
On the contrary, the analysis group notes that the Fear & Greed index tells a less optimistic story. The experts highlight that the index remains quite low, with values still in the 10-30 range, indicating that retailers are still left out of the action.
This ‘sidelining’ of retail traders may have its roots in the recent losses they have suffered, while institutional investors continue to accumulate due to ‘flow and structure’. Therefore, this behavior creates the classic “Wall of Worry” rally, where the price of a cryptocurrency (in this case Bitcoin) rises despite widespread market skepticism.
Thus, XWIN Research Japan explains that this could ultimately mean that the market is in the early or even middle stages of an “institutionally led uptrend,” in which retail participation is exempt from the factors actively driving prices. In a scenario where retail activity picks up with mostly bullish intentions, the leading cryptocurrency could rise even further.
At the time of writing, Bitcoin is valued at $75,703, with data from CoinMarketCap showing that the world’s largest cryptocurrency has lost 2.24% of its value in the past day.