Why Bitcoin needs 54 million investors to jumpstart its rally

• BTC has declined over the past week by 1.67%.
• Bitcoin’s number of individual investors must remain above 54 million for it to rally.

Over the past week, Bitcoin [BTC] has experienced a significant market correction. The correction was accompanied by a sharp decline in trading activities. Particularly, trading volume has declined by 62%, implying less demand and fewer participants.

This decline in participants has left analysts talking about the significance of individual investors for a BTC rally. One of them is the CryptoQuant analyst Burak Kesmeci, who has suggested that BTC must exceed 54 million individual investors to rally.

Why 54 million individual investors are critical

In his analysis, Kesmeci posited that the indispensable condition for Bitcoin’s bull rally is a surge in the number of individual investors.

Source: X

According to him, BTC needs to exceed 54 million individual investors for the crypto to see a price rise. The number of individual investors increased for 12 months after dropping to 43 million in January 2023.

Over this period, it has increased to hit 52.4 million, making a 22%. After the approval of ETFs, the number declined to 51.6 million in February 2024.

However, this number saw a sustained increase during the March 2024 rally and peaked at 54.14 million in June. Since then, the number of individual investors has declined.

Historically, an increase in the number of individual investors closely correlates with BTC prices. For instance, BTC surged by 300% when the number of individual investors increased in January 2023.

Consequently, after the number of individual investors peaked in June 2024, the Bitcoin price declined.

Bitcoin’s number of participants continues to decline

The analysis provided by Kesmeci suggests that it’s essential for the number of investors to increase for a BTC rally. This implies that new entrants into the BTC blockchain are essential for price appreciation. The question is, are new investors entering the market?

According to AMBCrypto’s analysis, Bitcoin is experiencing a decline in the number of participants.

Source: Cryptoquant

For example, Bitcoin’s daily active addresses continue to decline. Over the past week, active addresses have dropped from 1.1 million to 899k. This suggests that fewer investors are entering the market, signaling a decline in the number of individual investors.

Source: Cryptoquant

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Additionally, Bitcoin’s transaction count has declined from 834k to 598k over the past week. This indicated lower demand for BTC as fewer investors are using the blockchain.

As observed above, BTC is experiencing a decline in the number of participants. This usually results in a market correction, as witnessed over the past week with Bitcoin trading at $67,074 at press time. Thus, if the current trend persists, BTC might decline further to $65,757.