After a relatively predictable Federal Reserve meeting, Bitcoin’s (BTC, $104,512) price action turned bullish, 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 its price chart. A daily close above $105,000 would mark only the third instance BTC has surpassed the $105K threshold since breaking the six-figure level on Dec. 8, 2024.
Bitcoin Open Interest Adds $1.2 Billion
Bitcoin’s futures market reacted quickly to the Federal Open Market Committee (FOMC) meeting, with data showing that over $1.2 billion in open interest (OI) was added in the past 24 hours. The OI rose by 8%, reaching a high of $65 billion on Jan. 30. Alongside the increase in OI, a clear rise in the aggregated funding rate was observed, indicating that most long positions were opened, with prices moving in tandem. Despite the futures market turning bullish, one key data point stands out: retail investor activity at peak prices. Data from Glassnode showed that BTC retail spend volumes of wallets holding less than 0.1 BTC had dropped by 48% since November 2024. Spending volumes peaked in November when investors were spending over $20.6 million per hour, compared to just $10.7 million per hour on Jan. 30. Meanwhile, crypto commentator Quinten Francois noted that despite Bitcoin trading above $100,000, retail interest has hit a three-year low. “This time is different,” he stated, highlighting a shift in retail investor behavior.
“This Time Is Different”
One possible explanation for the drop in retail investment compared to previous market cycles is the concept of “unit bias.” Unit bias is a psychological phenomenon in behavioral economics, where individuals tend to prefer owning a complete unit of an asset, regardless of its price. With Bitcoin now priced above $100,000, many investors may perceive it as “too expensive” to buy a whole unit. Sunny Po, a Bitcoin advocate, captured this mindset by stating, “Unit bias is a core foundational framework of the normie mind. ‘Cheaper better.’” This bias is evident in 2024 when XRP gained attention for its lower price, generating hype and unrealistic price predictions like “$XRP to $1,000” or “$XRP to $10,000.” These claims, often ignoring market cap realities, attract new investors, especially when compared to Bitcoin and Ether (ETH, $3,263).
Bitcoin’s rally in 2024 has been largely driven by institutional investment and the rise of spot BTC ETFs. Despite retail interest dropping since November, data from CoinGlass showed that the total market cap of BTC ETFs grew from $70 billion on Nov. 5 to $125 billion on Jan. 30 — a 78% increase. It is reasonable to assume that many new investors may prefer exposure to Bitcoin through BTC ETFs, as these do not require self-custody. While retail investors may still be active, they aren’t generating new blockchain addresses, which is typically used to classify retail on-chain activity. According to Glassnode, a significant portion of Bitcoin has been moved from exchanges to ETF custodian wallets, reducing balances from 3.1 million to 2.7 million in seven months. This further supports the idea that retail investors are opting for third-party investment vehicles over direct on-chain transactions.
Conclusion
The Bitcoin market continues to see bullish momentum, driven by futures market activity and institutional interest, especially through spot BTC ETFs. However, retail investor activity has waned, with many opting for exposure through ETFs rather than direct ownership of Bitcoin. The psychological concept of unit bias, alongside Bitcoin’s high price point, seems to be playing a significant role in diminishing retail participation. Until retail investors re-enter the market or shift their strategy, Bitcoin’s upside might remain constrained.
FAQs
Why has retail investor spending dropped despite Bitcoin’s high price?
The drop is likely due to “unit bias,” where many retail investors view Bitcoin’s high price point as too expensive to buy in full. Many are shifting towards smaller, cheaper assets or investing in Bitcoin through ETFs instead of purchasing the asset directly.
What is unit bias, and how does it affect Bitcoin investment?
Unit bias refers to the psychological tendency for investors to prefer owning a complete unit of an asset. With Bitcoin’s price now above $100,000, many investors may feel that buying a whole Bitcoin is unfeasible, which could deter retail spending.
Why are more investors turning to Bitcoin ETFs?
Bitcoin ETFs provide exposure to Bitcoin without the need for self-custody, making it easier for institutional investors and retail buyers who may be hesitant about direct ownership to gain exposure to the cryptocurrency. This shift has led to a rise in ETF market cap.
I am Toby Rothschild, Co-Founder of Spearmint and author at Coinography, and a strategist focused on advancing Web3 innovation, digital ecosystems, and the future of decentralized technology. I combine product thinking, creative leadership, and deep interest in emerging trends to help shape how individuals and organizations interact with the next generation of digital systems.
My work centers on understanding how blockchain, AI, and digital identity are reshaping global industries. At Spearmint, I help lead the direction of initiatives that bring clarity, structure, and meaningful user experiences to complex technological environments. I focus on bridging vision with execution, ensuring that innovation remains practical, scalable, and aligned with long-term growth.
As an author at Coinography, I create insights that translate fast-moving Web3 developments into clear, useful narratives. I explore topics such as decentralized governance, digital identity, creator economies, token models, protocol design, and the shifting cultural patterns around emerging technology. My aim is to make digital transformation more understandable and approachable for a wider audience.
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