#112 On-chain Insights by IT Tech - Week 3 Bitcoin Analysis & Highlights
Institutional Moves and Whales vs. Retail: Decoding the Market’s Next Step.
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Table of contents:
Partnership with WymienBitcoina.pl
Crypto Weekly: TOP 10 News
Current market situation
Signs of Institutional Rebound: Weakening Negative Coinbase Premium
Correlation between USDT and USDC market caps and Bitcoin price
Retail vs. Whales: Unveiling the Market’s Next Move
Paid newsletter subscription - support content development
Newsletter issue summary and forecast
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2. Crypto Weekly: TOP 10 News.
Here are the top 10 crypto news stories from Monday, January 20, 2025, to now:
Trump Signs Crypto Executive Orders: Two executive orders were signed to establish a national digital asset stockpile and a crypto working group.
Bitcoin Price Movements: Bitcoin briefly crossed $100,000 before experiencing a slight decline amid policy announcements.
SEC Rescinds SAB121: The SEC has made it easier for companies to custody crypto assets by rescinding SAB121.
Solana's Surge: Solana saw significant price increases, partly due to the launch of Trump and Melania meme coins on its blockchain.
Ross Ulbricht Pardoned: President Trump granted a full pardon to Silk Road founder Ross Ulbricht.
Crypto Market Volatility: The crypto market has shown volatility, reacting to new policy developments.
New Crypto Task Force: Trump forms a task force to explore creating a national crypto reserve.
Banks Can Now Custody Crypto: U.S. banks have been given the green light by the SEC to legally store cryptocurrencies.
Trump-Melania Tokens: Post-inauguration, tokens associated with Trump and Melania have experienced significant price fluctuations.
Silence on Crypto from Trump: Despite expectations, Trump hasn't issued direct comments on crypto policy, leading to speculation and debate.
3. Current market situation.
Based on the heatmap provided, the following observations can be made regarding the cryptocurrency market trends:
1. Bitcoin Stability: Bitcoin (BTC) shows a modest increase of +0.53%, trading at $104,685. This reflects its continued dominance and relative stability in a mixed market environment.
2. Ethereum Resilience: Ethereum (ETH) sees a slight gain of +0.83%, trading at $3,302. While not as dominant as Bitcoin, it shows steady performance compared to the broader market.
3. Altcoin Divergence: Altcoins display mixed results, with notable winners like OP (+13.95%), HBAR (+3.36%), and SOL (+3.04%). In contrast, coins like DOGE (-1.36%) and BGB (-3.45%) highlight selective capital flow within the altcoin space.
4. Market Sentiment: The overall heatmap suggests a neutral-to-positive sentiment, with green dominating large segments of the market. However, pockets of red indicate localized corrections, underscoring the mixed momentum.
4. Signs of Institutional Rebound: Weakening Negative Coinbase Premium.
The Coinbase Premium Index measures the price difference between Coinbase Pro (USD pair) and Binance (USDT pair). High premium values may indicate strong buying pressure from U.S. investors on Coinbase.The negative trend in the Coinbase Premium Index is weakening, indicating a potential renewed interest from U.S. institutional investors.
Key Observations:
1. Reduced Intensity of Negative Premium: While the index remains negative overall, the depth and frequency of the red bars have diminished, suggesting less aggressive selling pressure or hesitation among institutions.
2. Stabilization Around Key Levels: The gradual shift toward neutrality indicates a growing equilibrium between buyers and sellers, which could precede a return of institutional demand.
3. Potential Rebound in Institutional Sentiment: This weakening of the negative trend may signal that U.S.-based institutions are reassessing their positions and could be preparing for re-entry if broader market conditions remain favorable.
Updated Conclusion:
The declining intensity of the negative Coinbase Premium Index suggests institutional sentiment may be shifting toward a more neutral or slightly bullish outlook. While it is too early to confirm a full reversal, this trend could support Bitcoin’s price stability or even lead to upward movement if institutional interest continues to recover. Monitoring the index in the coming days will be critical to confirm this hypothesis.
5. Correlation between USDT and USDC market caps and Bitcoin price.
Rising stablecoin market capitalization (USDT and USDC) typically correlates with increasing Bitcoin prices, indicating higher market liquidity and demand.
Conversely, declining stablecoin market capitalization often signals increased crypto selling and lower liquidity, potentially leading to Bitcoin price decreases.USDT Daily Market Cap Change (in million USD):
• 2025-01-20: +49.10M USD
• 2025-01-21: +222.70M USD
• 2025-01-22: +43.91M USD
• 2025-01-23: +156.00M USD
• 2025-01-24: +302.49M USD
• 2025-01-25: +368.71M USD
Net USDT Market Cap Change (20 Jan 2025 - 25 Jan 2025): +1.14 billion USD
This significant increase in USDT market capitalization indicates growing liquidity and demand in the cryptocurrency market during this period.
USDC Daily Market Cap Change (in million USD):
• 2025-01-20: +174.52M USD
• 2025-01-21: +2.82B USD
• 2025-01-22: +572.33M USD
• 2025-01-23: +438.97M USD
• 2025-01-24: +253.15M USD
• 2025-01-25: -11.39M USD
Net USDC Market Cap Change (20 Jan 2025 - 25 Jan 2025): +4.25 billion USD
This significant surge in USDC market capitalization, particularly the sharp increase on January 21, indicates strong liquidity inflows and potential accumulation during this period. The slight drop on January 25 appears minor in the broader upward trend.
Combined Net Market Cap Change for USDT & USDC (20 Jan 2025 - 25 Jan 2025): +5.82 billion USD
Conclusion:
This significant combined increase highlights a strong inflow of liquidity into the cryptocurrency market over the past six days. It signals renewed confidence among investors and may contribute to supporting Bitcoin’s price stability and potential upward movement.
6. Retail vs. Whales: Unveiling the Market’s Next Move.
Observations:
Retail Holdings (Violet Line): Retail investors are reducing their positions. This trend is evident as the purple line shows a decline in holdings over the observed period. Such behavior typically signals a lack of confidence or profit-taking by smaller, less experienced market participants.
Large Investor Holdings (Blue Line): Large investors, often referred to as “whales,” are accumulating Bitcoin, as represented by the steady rise of the blue line. This suggests confidence in the long-term potential of Bitcoin, as whales are positioning themselves to benefit from future price increases.
Price Correlation: The price (white line) is moving upward despite retail investors selling off, which reinforces the idea that whales are driving the market. Historically, such accumulation by large investors during periods of retail sell-offs has preceded bullish price trends.
Interpretation:
Retail Selling Weakness: The reduction in retail holdings may indicate short-term uncertainty or fear among smaller investors, possibly driven by recent market volatility or profit-taking at higher price levels.
Whale Accumulation Strength: The accumulation by whales highlights confidence in Bitcoin’s future growth, as they often accumulate during periods of retail sell-offs, taking advantage of discounted prices or weak hands exiting the market.
Conclusion:
The divergence between retail and large investors is a classic indicator of market dynamics. While retail investors are reducing their exposure, whales are capitalizing on this opportunity to accumulate more Bitcoin. This pattern historically aligns with the accumulation phases preceding further price appreciation. Traders and investors should consider aligning their strategies with the behavior of large investors, as they often have a better understanding of long-term market trends.
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8. Newsletter Issue Summary:
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Crypto Weekly: TOP 10 News: Major highlights include Bitcoin surpassing $100,000, Trump’s crypto executive orders, Solana’s surge, and SEC regulatory changes benefiting crypto custody.
Current Market Situation: Bitcoin and Ethereum show stability amidst mixed altcoin performance. Positive sentiment dominates the market, with selective capital flows favoring certain altcoins.
Signs of Institutional Rebound: The weakening negative Coinbase Premium Index suggests a potential return of institutional demand. The shift could stabilize or boost Bitcoin prices.
Correlation Between Stablecoins and Bitcoin: USDT and USDC market caps grew by $5.82B, signaling increased liquidity and renewed investor confidence, supporting Bitcoin’s price.
Retail vs. Whales: Retail investors are reducing positions, while whales are accumulating Bitcoin. Historically, this signals a bullish trend as large investors prepare for potential price increases.
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Forecast for the Upcoming Week:
Institutional Activity: Monitor the Coinbase Premium Index. A sustained shift towards neutrality or positivity may drive Bitcoin’s price higher.
Stablecoin Liquidity: Continued inflows into USDT and USDC suggest strong market support. Watch for further increases to signal bullish momentum.
Retail Behavior: If retail selling continues and whales accumulate further, expect potential upward price movement in Bitcoin.
Altcoin Performance: Focus on coins like Solana and OP, which have shown strong momentum, but remain cautious with meme coins due to volatility.
Macro Events: Regulatory updates and U.S. crypto policy developments could influence institutional sentiment and market direction.
Stay alert and monitor key indicators for better market insights. Track upcoming US events for free using the Economic Calendar.
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This concludes this issue. I hope you have a pleasant end to your weekend and a great week ahead.
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IT Tech