Bitcoin price has regained upward traction, trading back above $105,000 after a temporary dip below $104,000 earlier today. This 1.2% increase over the past hour reflects renewed optimism in the market.
Amid this price performance, Crypto Dan, a CryptoQuant analyst has shared his analysis of on-chain data and market behaviors that may shape Bitcoin’s trajectory in the weeks and months ahead.
Bitcoin Bullish Market But Caution
According to Dan, the amount of Bitcoin held for less than six months continues to show notable growth with each market cycle. This trend suggests that as Bitcoin’s appeal widens, new capital inflows—particularly from the expected introduction of Bitcoin spot ETFs—could further drive demand.
Dan anticipates that both institutional and retail investors will ramp up their involvement as these ETFs gain traction by the first half of 2025.
Additionally, while current indicators remain bullish, Crypto Dan warns that surging interest in Bitcoin and altcoins, paired with an influx of new investors, could signal that the current cycle may be nearing its peak.
If Bitcoin pushes through its all-time high with significant momentum, and altcoins follow suit, it could trigger a wave of inflows that may mark the cycle’s final stages. Dan advises investors to start considering risk management strategies.
The Crypto Market Remains Bullish… But It’s Time for Caution
“If Bitcoin breaks through its all-time high with strong momentum and altcoins follow suit, triggering a wave of new investor inflows, it may indicate that the end of the cycle is approaching.” – By @DanCoinInvestor… pic.twitter.com/NvKB8Ly1DE
— CryptoQuant.com (@cryptoquant_com) January 31, 2025
Diverging Inflows from Retail and Whales
This cautionary note is reinforced by observations from another CryptoQuant analyst, Darkfost, who highlights a discrepancy in the behavior of retail investors and whales.
According to recent Binance data, retail investors have significantly increased their BTC ($102,356.30) deposits over the past month, with inflows reaching approximately 6,000 BTC. In contrast, whale activity on Binance has dwindled, with their BTC inflows dropping to around 1,000 BTC—a fourfold decrease.
Darkfost notes that retail investors often use exchanges to liquidate their holdings, whereas whales’ reduced inflows suggest they are holding onto their Bitcoin.
This contrasting behavior offers insights into broader market sentiment: retail participants appear eager to capitalize on short-term gains, while larger, more established investors maintain a more cautious stance.
Historically, following whale behavior rather than retail trends has provided a more reliable signal for long-term market moves. Darkfost highlighted this noting:
This is a perfect example of the contrasting behaviors between whales and retail traders and it is often considered a better choice to follow whales rather than retail investors
Featured Image created with DALL-E, Chart from TradingView
