Market Braces For Trump’s Inauguration; Whales Are HODLing While Retails Take Profits

Key Highlights:

• Market Dynamics: The cryptocurrency market is experiencing volatility influenced by political events, regulatory changes and whale activity. In particular, the market is bracing for Trump’s inauguration in the U.S. on Jan 20, 2025.

• Institutional Interest: On-chain analytics indicate a notable decrease in whale activity over the past two weeks, with wallets holding between 10,000 and 100,000 BTC reducing transactions by 14%.

• Decoupling Trends: Bitcoin is showing signs of decoupling from traditional markets, suggesting it may be emerging as a more independent asset class.

Market Overview

As 2025 begins, the cryptocurrency market is rebounding from a tumultuous 2024 characterized by regulatory concerns and whale profit-taking. Bitcoin is struggling to break the psychological barrier of $100,000, with traders anxiously awaiting the impact on crypto policies of Donald Trump’s inauguration. Despite the excitement surrounding Trump's pro-crypto stance, apprehensions linger regarding potential market corrections reminiscent of previous downturns. 

Social media discussions have cooled, reflecting a decline in euphoria, while many projects have seen reductions in market cap, except for a few like Sui and Bitget Token. Traders are increasingly focused on the implications of upcoming legislation and the Federal Reserve's interest rate decisions.

Whales Are HODLing

Sources: Bybit, Santiment

On-chain analytics indicate a notable decrease in whale activity over the past two weeks, with wallets holding from 10,000 to 100,000 BTC reducing transactions by 14%. This downturn contrasts sharply with the increased whale activity in late 2024 that fueled Bitcoin's rally past $100,000.

In contrast, smaller retail investors have increased their activity, with wallets holding less than 1 BTC boosting transaction counts by 22%. The number of non-empty wallets has also started to rise in the new year. However, wallets with less than 1 Bitcoin have collectively lost 41.9K BTC since October 11, 2024, signaling potential bullish sentiment as their selling contributes to a rising market cap.

Although these smaller wallets show slight signs of accumulation post-Christmas, they’ve only added a total of 945 BTC. Retail traders are largely on the sidelines, and in order to sustain a bull market, a return to the late-2024 selling trend would be beneficial.

Bitcoin Decouples From Traditional Assets

Sources: Bybit, Santiment

Recent data reveals a notable decoupling of Bitcoin from traditional markets, with the correlation coefficient dropping significantly. This suggests that Bitcoin may be establishing itself as a distinct asset class, driven more by regulatory developments and institutional interest than macroeconomic factors. Whale activity has cooled, while smaller investors have increased their transaction counts, indicating a shift in market dynamics. 

Despite a general decline in trading volumes across cryptocurrencies and altcoins, there are signs that traders might find opportunities as average trader returns enter “opportunity zones.” The current landscape calls for close monitoring of whale behavior and market sentiment in order to navigate the complexities ahead.

#BybitLearn #BybitResearch