Bitcoin’s declining investor interest – Is a long-term downturn on the way?

• Coinbase Premium Index hinted at declining U.S. investor interest, with a drop in active addresses
• Exchange netflows alluded to reduced selling pressure as Bitcoin traded close to its support levels

Bitcoin [BTC] is in the news today after it registered a major decline on the Coinbase Premium Index, with the same falling below zero. This can be seen as a sign of the growing lack of enthusiasm from U.S investors at BTC’s current price levels. 

This shift in investor sentiment, coupled with negative trends in key market metrics, hinted at caution in the crypto space. At the time of writing, Bitcoin was trading at $96,487 after falling by just under 2% at press time. 

What do BTC address stats reveal about market participation?

Well, the numbers tell us an unsettling story. New BTC addresses have fallen by 1.02% over the past week, pointing to a slowdown in user adoption. 

Additionally, the number of active addresses dropped by 4.23%, showing less interaction among users with the network. The total number of zero-balance addresses fell by 7.89% too. 

Such a drop in both active and new addresses is a sign that retail participation may be weakening. Simply put, this can further dampen bullish expectations.

Source: IntoTheBlock

Bitcoin transaction stats – Is retail activity increasing?

BTC’s transaction statistics revealed varied trends across different transaction amounts. Interestingly, transactions under $1 surged by 234.89%, suggesting that retail participation is still relatively high. 

However, larger transactions, particularly those between $100k and $1 million, dropped by 10.27%. This decline in larger transactions could indicate that institutional investors are holding back, which puts additional pressure on Bitcoin’s price action.

Therefore, while retail activity may be rising, the absence of significant institutional inflows could mean a potentially weaker market.

Source: IntoTheBlock

Key price levels to watch

Bitcoin’s price chart underlined a struggle to maintain any upward momentum. At the time of writing, Bitcoin seemed to be testing the critical $96,500-support level. If this level holds, Bitcoin might have a chance to move towards the resistance at $100,000 and potentially, $104,000. 

However, the Relative Strength Index (RSI) had a reading of 46.03, hinting at a neutral market without overbought or oversold conditions. This indicated that Bitcoin’s price may continue to trade sideways unless it decisively breaks through these key resistance levels.

Source: TradingView

Exchange netflows – What do they suggest about market sentiment?

Finally, Bitcoin’s exchange netflows have seen a positive shift lately, with a 4.02% hike in the last 24 hours. More BTC is flowing off exchanges than into them, indicating that investors are opting to hold rather than sell. 

This trend typically means lower selling pressure, which could be a sign of market accumulation or long-term holding behavior. However, this does not necessarily indicate strong buying momentum or an imminent price hike.

Source: CryptoQuant

Is Bitcoin in a slump or poised for recovery?

The combination of declining U.S investor interest, falling active addresses, and reduced institutional transactions, all point to a challenging short-term outlook for Bitcoin. Despite neutral RSI levels and positive netflows, BTC may struggle to break through its key resistances. 

Given these factors, Bitcoin is likely to face sustained consolidation or even fall further in the near term. Therefore, without a significant shift in sentiment, Bitcoin’s recovery seems uncertain.