Can Bitcoin’s $111K Rally Be Sustained Without Retail Investor Support?

Bitcoin has reached a new peak of $111K, yet the diminishing presence of small investors raises concerns about the sustainability of this bullish trend.

• Long-term holders continue to fuel Bitcoin’s rally as the activity of smaller wallets hovers at multi-year lows.

• Indicators like the NVT Ratio and HODL Waves support Bitcoin’s bullish momentum but suggest possible overvaluation in the near future.

Bitcoin’s [BTC] price has surged to approximately $111K, but the number of small investor addresses holding less than 1 BTC has plummeted from 590,000 in 2021 to about 260,000 today. This sharp decline signals a waning interest among everyday investors, despite a bullish price trajectory.

The present rally is predominantly driven by large investors and long-term holders, raising questions about its durability without retail investor resurgence.

This article examines the recent surge in Bitcoin’s price, highlighting the reliance on long-term holders while retail investors remain absent, posing sustainability challenges.

Is Bitcoin’s breakout above $110K truly sustainable?

Bitcoin has successfully navigated the high-congestion supply zone between $105K and $110K, trading at $110,510 as of the latest updates.

This pivotal breakthrough marks a significant technical achievement, pushing the price past resistance levels that previously resulted in rejections. Nonetheless, the RSI on the daily chart has ascended above 77, indicating overbought conditions; typically, such a scenario precedes a price correction.

However, it is crucial to note that bullish trends can sustain themselves in this zone during robust upward movements. Hence, the breakout may endure if demand remains firm, provided that profit-taking efforts are not escalated.

Source: TradingView

Has BTC cooled off enough as the NVT Golden Cross dips?

The NVT Golden Cross has decreased by 49.46%, standing at 0.79 at the last check. This indicates that Bitcoin’s price is not outpacing its on-chain transaction value as aggressively as it did previously.

Past trends show that such decreases often foreshadow reduced short-term peaks, thereby lowering the risk of overheating and supporting a healthier market environment.

Source: CryptoQuant

Notably, the “Weighted Sentiment” has surged to 5.15, marking an exceptionally high indicator of crowd euphoria. Historically, such exuberance often precedes a period of consolidation or price reversals, particularly in the absence of retail backing.

This means that traders should be vigilant for possible short-term corrections should momentum begin to wane.

Is BTC becoming overvalued as the NVT ratio skyrockets?

The NVT ratio has risen to 374.17, suggesting a widening gap between Bitcoin’s Market Capitalization and its Transaction Volume.

Heightened NVT readings often imply overvaluation, particularly when there is no corresponding increase in network activity. Thus, this metric signals a need for caution: a potential pullback could occur if transaction volumes do not match up.

Nevertheless, in bullish markets, elevated NVT ratios can persist for extended spells, indicating that these high figures should be viewed as cautionary flags rather than outright stop signs.

Source: Santiment

Are holders signaling long-term belief as short-term speculation fades?

The Realized Cap HODL Waves for assets held for 0–1 days have reached a low of 0.33, indicating that recent trading is not driven by short-term speculators. This data point reflects minimal activity from new investors, signifying that long-term holders are now dominant in the market.

Historically, low levels of wave activity have been associated with strong hands, typically supporting sustained price increases.

Source: Santiment

The combination of a declining NVT Golden Cross and the strong conviction among holders bolsters the bullish narrative, despite some mixed signals in the market.

While Bitcoin’s breakthrough and robust on-chain support present encouraging prospects, the lack of retail involvement highlights a limitation for exponential price growth. Until smaller wallet investors re-enter the scene, the rally could remain subdued, heavily reliant on the actions of whales and institutional players.

Conclusion

Bitcoin’s current performance illustrates a complex dynamic, where high prices persist amidst reduced retail participation. Long-term holders seem to strengthen the market’s foundation; however, without the engagement of smaller investors, the trajectory of the rally may be constrained. Traders should remain vigilant and closely monitor developing market conditions, including the potential return of retail investors.