Bitcoin Retail Investor Selling Signals Coming Pullback, but There Might be a Catch

• “Shrimps” have been net sellers of about $7 billion in bitcoin over the past 30 days.

• On the other hand, just under 3 million bitcoin are sitting on exchanges, a two-year low.

• OTC desk balances, though, have seen a rise of roughly 100,000 bitcoin.

With bitcoin (BTC) continuing to post record highs and now nearing the $100,000 level, profit-taking is on the rise — $4 billion of realized profit in each of the last two days, according to Glassnode — but for every seller, there’s a buyer, so a closer look at the data might be warranted.

So-called “shrimps” or retail investors have sold approximately 75,000 BTC ($7 billion), according to Glassnode. That’s the largest distribution from this cohort since bitcoin broke its all-time in March at above $73,000. While it’s commonly thought that retail investors may represent “dumb money,” at least some research suggests otherwise.

And who is buying retails’ bags? Large holders — dubbed “sharks — who hold a bitcoin balance between 100 and 1,000 BTC have accumulated over 140,000 BTC, according to Glassnode.

Divergence occurring between exchange balances and OTC desks

The exchange balance action might tell a different story. Over-the-counter desk balances have continued their strong rise over the second half of 2024, suggestive of large investors cashing in on bitcoin’s surge. Bitcoin’s breach of $90,000 this week led to OTC desk balances rising by another 20,000 tokens, according to CryptoQuant.

Retail exchange balances, however, have fallen to less than 3 million tokens, according to Glassnode, the lowest level in two years. That would seemingly be evidence of strong buying interest.

Bottom line: There appears to be a tug of war in the data, with one set indicating sizable retail profit taking similar to the market top earlier this year and another set showing the opposite. As always, the short-term outlook remains cloudy.