A recent on-chain analysis suggests that Bitcoin is once again showing divergence across its investor cohorts, specifically between institutional players and retail investors. According to this analysis, the Bitcoin price may have more room for growth than we have seen so far in this cycle.
Bitcoin ETF Flows Align With Coinbase Premium Index Readings
In a recent Quicktake post on the CryptoQuant platform, crypto research and education firm XWIN Research Japan delves into the dynamics of the Bitcoin market noting 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. The 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 the XWIN Research Japan, ETF Flows and the Coinbase Premium at (~0.56)are displaying a positive correlation signalling aligning inflows with spot demand. However, XWIN Research Japan points to an important distinction: institutional buying actually precedes ETF inflows, not the other way around, as is popularly believed. Hence, the rising values from 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 Retail Fear
On the contrary, the analytics group notes that the Fear & Greed index is telling a less optimistic story. The experts highlight that the index remains quite low, with readings still within the range of 10-30, indicating that retailers are still outside the action.
This “sidelining” of retailers might have roots in the recent losses they incurred, while institutional investors continue to accumulate due to “flow and structure.” Therefore, this behavior creates the classic “Wall of Worry” rally, in which a cryptocurrency’s price (Bitcoin, in this case) rises despite widespread market skepticism.
Thus, XWIN Research Japan explains that this could ultimately mean the market is in the early or even mid phase of an “institutional-led uptrend,” in which retail participation is exempt from the factors actively driving prices. In a scenario where retail activity picks up with predominantly bullish intent, the premier cryptocurrency could be in for further upside.
As of press time, Bitcoin is valued at $75,703, with CoinMarketCap data showing the world’s leading cryptocurrency has lost 2.24% of its value over the past day.