Bitcoin futures metric adds $1.2B after FOMC, but retail investor spending is down 50% — Why?
2025-01-31
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After a relatively predictable FOMC, Bitcoin’s (BTC) price action turned bullish, with the cryptocurrency rallying as high as $106,500 on Jan. 30. Bitcoin registered a positive breakout from a descending trendline, increasing the probability of another leg higher in the chart. 
A daily close above $105,000 will be BTC’s only third instance above the threshold since breaking the six-figure price level on Dec. 8, 2024. 
Bitcoin open interest adds $1.2 billion 
Bitcoin’s futures market quickly acted after the FOMC meeting, as data highlighted that over $1.2 billion in open interest was added in the past 24 hours. The open interest (OI) increased by 8%, reaching a high of $65 billion on Jan. 30. 
A clear increase in the aggregated funding rate was also observed alongside rising OI. This implied that most long positions were opened, with prices also moving in unison. 
Despite the futures market turning bullish, one particular data set that has been different from the past cycle is the retail investor activity at peak prices. Data from Glassnode highlighted that BTC retail spend volumes of wallets holding less than 0.1 BTC had dropped by 48% since November 2024. 
The spending volume peaked in November 2024, with investors spending over $20.6 million per hour, compared to $10.7 million per hour on Jan. 30. 
Meanwhile, Quinten Francois, a crypto commentator, also mentioned that despite Bitcoin trading above $100,000, the retail interest has reached a three-year low. 
Related: BTC price taps $106K as US GDP miss boosts Bitcoin bull case
“This time is different”
One particular reason why retail investment in Bitcoin has dropped when compared to previous market cycles is the concept of “unit bias.” 
Unit bias is a psychological heuristic in behavioral economics that suggests that individuals usually like to own a complete unit or stock regardless of its price and size. With Bitcoin, most investors currently view $100,000 as “too expensive.” 
Sunny Po, an anonymous Bitcoin proponent, aptly explained the mindset of a new investor and said, 
In 2024, XRP gained attention because of its low price, leading to clickbait posts with unrealistic predictions like “$XRP to $1,000” or “$XRP to $10,000.” Many overlook market cap realities, but these bold claims attract new investors, especially when compared to Bitcoin and Ether (ETH).
Additionally, Bitcoin’s rally in 2024 has been largely led by institutions and the rise of spot BTC ETFs. While retail interest has dropped since November 2024, data from CoinGlass indicated that the total market cap of BTC ETFs increased from $70 billion on Nov. 5 to $125 billion on Jan. 30, i.e., a 78% rise. 
A fair assumption is that new investors are possibly favoring exposure through the BTC ETFs as well since self-custody is not required in such third-party investment vehicles. Therefore, while retail investors may be active, they are not generating new blockchain addresses, which are typically classified as retail onchain activity.
According to Glassnode, investors moved most Bitcoin from exchanges to ETF custodian wallets, reducing balances from 3.1 million to 2.7 million in seven months, further validating the above argument. 
Related: Forget FOMC — Bitcoin price now has 'plenty of room' to reach $108K
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.