Recent on-chain analysis suggests that Bitcoin is once again showing divergence across the investor population, particularly between institutional and retail investors. According to this analysis, Bitcoin price may have more room for growth than we have seen so far this cycle.
Bitcoin ETF flows match Coinbase Premium Index measurements
In a recent Quicktake post on the CryptoQuant platform, cryptocurrency research and education firm XWIN Research Japan takes a closer look at the dynamics of the Bitcoin market and notes that significant structural changes are occurring.
The metrics relevant to this analysis are Total Bitcoin Spot ETF Net Inflows, Coinbase Premium Index, and Fear & Greed Indicator. ETF inflows measure the net amount of Bitcoin flowing into and out of spot ETFs. Coinbase Premium tracks the price difference between Coinbase and other exchanges.
According to XWIN Research Japan, ETF flows and Coinbase premium (~0.56) show a positive correlation indicating that inflows are in line with spot demand. However, XWIN Research Japan points out an important difference. That means institutional purchases actually precede ETF inflows and not the other way around, as is commonly believed. Therefore, the increase in value from the Coinbase premium indicates that US investors are buying again and is a key driver of Bitcoin price.
Fear and Greed Index reveals persistent retail fear
On the contrary, the analysis group notes that the Fear & Greed index tells a less optimistic story. Experts emphasized that the index is still in the 10-30 range, still at a fairly low level, indicating that retailers are still not subject to measures.
The retailer's 'sideline' may be due to recent losses it has suffered, while institutional investors continue to rack up losses due to 'flow and structure'. This action thus creates a classic “wall of worry” rally, where the price of a cryptocurrency (in this case Bitcoin) rises despite widespread skepticism in the market.
Therefore, XWIN Research Japan explains that this could ultimately mean that the market is in the early or even mid-stage of an “institution-led uptrend,” where retailer participation may be excluded from being a factor that actively moves prices. In a scenario where retail activity recovers with primarily bullish intent, the leading cryptocurrencies could rise further.
At the time of writing, Bitcoin was valued at $75,703, with data from CoinMarketCap showing that the world's leading cryptocurrency has lost 2.24% of its value in the past day.
