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Retail FOMO for Bitcoin (BTC) has skyrocketed since 2017, here’s why it’s time for caution

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05
Apr
  • Historically, the retail interest spikes have coincided with macro tops which makes the current situation a bit concerning.
  • Retails and institutional purchases of Bitcoin (BTC) have continued over the last few weeks.

The world’s largest cryptocurrency Bitcoin (BTC) has made a strong move recently and is currently resting above the $46,500 level. However, on-chain data suggests that there’s some FOMO among the retail buyers at this point.

On Monday, April 4, William Clemente, lead insights analyst at Blockware, said that there’s a sharp spike in the Bitcoin supply owned by smallholders. Here, he typically refers to retail entities owning less than 1 BTC. Sharing a chart from on-chain data provider Glassnode, Clemente mentions that there’s a dramatic surge in the BTC supply owned by retail investors in 2022. He writes:

This is a really interesting chart. Retail (0-1 BTC) is currently buying at the second-highest rate in Bitcoin’s history. Looking at retail’s holdings most spikes have coincided with macro tops, but on several occasions, they have bought strategically. This spike is an outlier.

Bitcoin BTC Supply Retail

Courtesy: Glassnode

Clemente further adds: “Either we are doomed or retail has chosen to use Bitcoin as a savings account and opt-out of the fiat system. The optimist in me hopes it is the latter”.

As per data from Glassnode, the entities owning between 0.1 BTC to 1 BTC now collectively own a total of 800,500 BTC. On the other hand, the Google Trends data showing worldwide interest in “Bitcoin” shows less interaction than seen before November 2021, when BTC touched its all-time high levels of $69,000.

Strong Bitcoin accumulation by retail and whales

During the recent Bitcoin (BTC) price correction in late February and early March, both retail players and whales have chipped in. In its latest report, Glassnode mentions:

Accumulation is being driven by Shrimps (<1 BTC) and Whales (>1k BTC), both of whom have added significantly to their balances over recent weeks.

On the other hand, institutions have continued with their whale purchases. MicroStrategy’s subsidiary – MacroStrategy –  secured a big loan from crypto bank Silvergate to increase the size of its bag of Bitcoin holdings. MicroStrategy currently holds more than 120,000 BTC and will be using part of its holding as collateral for the loan. The company is willing to make an additional $220 million worth of BTC purchases.

The biggest accumulation last month has been by the Luna Foundation Guard (LFG). The parent group of Terraform Labs has decided to buy $10 billion worth of BTC as a peg for its UST stablecoin. In the last month, LFG purchased a staggering $1.5 billion worth of BTC. Terra founder Do-Kown recently said that he aims to become the second-largest holder of BTC after Satoshi.

Read More: Terra founder Do Kwon: I want to be the second biggest Bitcoin owner after Satoshi

Furthermore, Canadian Bitcoin ETF products from ProShares have been adding BTC to their bag. Since January this year, these products added a total of 6,594 BTC. This is a 10.5% percent surge in its Bitcoin holdings.

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