Significant part investors need to consider in supporting the upcoming Bitcoin rally

Over the last few weeks, Bitcoin has registered several ATHs. However, since the $40,000 mark was crossed, the hurricane has slowed down quite a bit. The asset is still in the middle of the bull run, but many were speculative and unsure as to whether or not BTC had reached the top.

Understanding Bitcoin’s Bullish Cycle

The significance of long-term investors in the current rally is now undeniable. Hodling sentiment has been evident since mid-2020 and BTC off-exchange supplies have continued to grow over the last few months.

Now, the macro bull-cycle starts after the reduction of the on-chain supply has led to a supply squeeze. The graph above shows the supply squeeze that was caused by aggressive accumulation, but for the next step of the rally, short-term investors might have a greater role to play.

Historically, the interest of the retail investor only peaked after BTC’s price increase or the market sentiment became unequivocally optimistic. The current supply crunch caused such a situation, and as soon as the short-term investors accrued a decent sum, they became a significant market driver.

Since short-term investors could have acquired Bitcoin when it was closer to the current market price, they are more sensitive while BTC’s value is experiencing a rally or correction.

As a result, short-term selling has become increasingly popular as the price continues to balloon on the market. The recent 6.86 percent crash is a prime example of this.

Where do we stand in comparison to 2017?

If we equate the current macro-cycle to the 2017 one, we could be in the middle of the transition, where the momentum moves from long-term holders to short-term holders.

The total supply kept by Short-Term Holders is projected to increase over the next few months in 2021, enabling Bitcoin to rise on another potential bullish rally.

Where did Retail-Investors come from in 2021? 

In the previous bullish period, the price surge had taken the retail sector to Bitcoin, but this time it was also driven by the proponents. Elon Musk, who quickly became an important figure in crypto, has been rinsing Dogecoin in the last few weeks. Behind the scenes, Musk’s Tesla has recently spent $1.5 billion in bitcoin from the company’s cash reserves.

A few days later, average daily active users jumped from 2-3 million to 4-5 million in the first week of February.

The second bull-wave could be beginning soon for Bitcoin, and the retailer/short-term holders are slowly growing their effect on space.