While long-term holders and institutions accumulate aggressively, derivatives traders show some caution due to macroeconomic uncertainties. Despite this, MicroStrategy continues its massive Bitcoin purchases, and once again hinted at a possible Bitcoin buy this week. Meanwhile, ETF innovation is accelerating after Nasdaq proposed an in-kind creation model for IBIT and new crypto ETF applications for assets like Litecoin and XRP are being submitted. Bitcoin Market Enters New Phase On-chain data reveals that the number of Bitcoin (BTC) wallets holding at least $100 is nearing all-time highs . According to Binance, wallet addresses with $100 or more surged from 24 million in January of 2024 to almost 30 million in 2025, which is a 25% year-on-year increase. (Source: Binance ) This trend aligns with historical patterns where spikes in wallet counts happened during bull runs, like in 2017, 2021, and end-2024 when Bitcoin surpassed the $100,000 milestone. The approval of spot Bitcoin ETFs played a pivotal role in this surge. By the end of 2024, ETF holdings doubled to 1.25 million BTC, with IBIT alone attracting over $50 billion in assets under management. Bitcoin’s network security also recently reached unprecedented levels after its hashrate surpassed 800 exahashes per second (EH/s) in January of 2025, up 33% from the previous year’s 600 EH/s. Binance was one of the first to point out this milestone , and shared that the combined computing power of major tech giants like Amazon AWS, Google Cloud, and Microsoft Azure contributes less than 1% of Bitcoin’s total network capacity. The soaring hashrate suggests robust miner activity, increased network security, and strong confidence in Bitcoin’s future. Market sentiment is also still bullish. CryptoQuant reported that about 86% of Bitcoin in circulation is currently “in profit.” Accumulator addresses, which are wallets consistently buying Bitcoin without selling, are purchasing at a record pace of 495,000 BTC monthly. Ki Young Ju , the CEO of CryptoQuant, commented on the shifting holder behavior, and pointed out that retail investors with less than 1 BTC are selling, while larger holders with at least 1 BTC continue to accumulate. Ju characterized the current market phase as the “early distribution phase” of the Bitcoin bull cycle. This stage is marked by new retail investors entering the market alongside strong institutional interest, with large holders gradually transferring Bitcoin to retail participants and institutions holding “paper Bitcoin” through ETFs and corporate stocks. Ju further noticed a divergence in this cycle , with “OG retail investors and whales” offloading Bitcoin to new retail entrants and institutional players. This could suggest that the final phase of distribution dominated by retail investors may not actually happen until mid-2025 or later. Bitcoin Derivatives Gap Signals Market Caution On the other hand, not everyone has high expectations for BTC’s next move. Although Bitcoin is circling all-time highs, derivatives traders are exhibiting record bearish sentiment. According to on-chain analytics platform CryptoQuant , the derivatives discount on Binance reached its largest-ever level, with contracts trading $62.40 below the spot price on Jan. 24. This big gap reflects caution among traders, which is influenced by certain macroeconomic factors like US inflation data and Federal Reserve policy expectations. Contributor Darkfost attributes the shift in behavior to projections for future rate cuts and better-than-expected inflation figures, which suggests that continued improvements in inflation data could restore investor confidence. Key US economic indicators, including the Consumer Price Index (CPI), Producer Price Index (PPI), and Personal Consumption Expenditures (PCE) Index, have been pivotal in shaping market sentiment. The next PCE release is scheduled for Jan. 31, shortly after the Federal Reserve's meeting on interest rates, which could hugely impact market dynamics. Bitcoin’s performance toward the end of Q4 showed mixed results, with BTC/USD frequently testing the $90,000 support level. Historically, during bull markets, the gap between spot and derivatives prices tends to normalize, with extreme negative gaps often signaling strong buying opportunities as sentiment stabilizes. Yonsei Dent (Source: CryptoQuant ) Short-term holders (STHs), or investors holding Bitcoin for up to six months, are still in profit as long as the price stays above $96,400. If Bitcoin falls below this level, STHs holding coins for one to three months will also slip into a net loss. CryptoQuant contributor Yonsei Dent called the $89,900 level a technical and on-chain zone of importance. Any major price movement from this level could have major implications for the broader market, making it a crucial area to keep an eye on. MicroStrategy Signals Another Bitcoin Purchase Others in the market are taking a much less cautious approach to Bitcoin buying. MicroStrategy co-founder Michael Saylor shared the Bitcoin tracker for the 12th consecutive week, which suggests another Bitcoin purchase expected on Jan. 27. The company’s latest acquisition took place on Jan. 21 by adding 11,000 BTC at an average price of $101,191 per coin. MicroStrategy now holds about 461,000 BTC, which is valued at approximately $48.4 billion. This is more than the Bitcoin holdings of the United States government. Despite Bitcoin’s recent pullback from its all-time high, MicroStrategy continues its aggressive accumulation strategy. The decline in Bitcoin’s price coincided with President Trump’s Jan. 23 executive order establishing the President’s Working Group on Digital Asset Markets. The Group is chaired by crypto and AI czar David Sacks, and is tasked with developing a ”national digital asset stockpile.” Unfortunately, the order made no direct reference to Bitcoin. As a result, the announcement triggered a sharp price drop . Bitcoin’s price action over the past week (Source: CoinMarketCap ) The order also sparked controversy in the crypto community. While some view the Group as a step in the right direction for the crypto industry, Bitcoin maximalists criticized the potential inclusion of altcoins in the proposed digital asset reserve. Max Keiser argued that embracing non-Bitcoin assets could harm the US. Pierre Rochard of Riot Platforms pointed to Ripple’s lobbying efforts as a big obstacle to establishing a Bitcoin-only reserve. Ripple CEO Brad Garlinghouse confirmed lobbying activities and clarified that any reserve will likely include Bitcoin alongside other digital assets. The prospect of a more diversified digital asset reserve created a lot of uncertainty among Bitcoin traders, limiting short-term upside potential. Many are concerned that including inflationary assets could shift focus away from Bitcoin as the centerpiece of a strategic reserve. New Bitcoin ETF Innovations Meanwhile, Nasdaq filed a proposal with the SEC on behalf of BlackRock to allow in-kind creation and redemption for its spot Bitcoin ETF, the BlackRock iShares Bitcoin Trust (IBIT). This mechanism allows Authorized Participants to use Bitcoin or cash to create or redeem ETF shares, which will improve efficiency by avoiding bid/ask spreads and broker commissions. While this model boosts transparency and liquidity for institutional participants, retail investors will continue using the cash model. The in-kind model streamlines ETF operations, reduces steps and parties involved, and enhances tax efficiency by minimizing capital gains distributions. These advantages will likely give IBIT a big boost, even though it already recorded $39.57 billion in inflows since its January 2024 launch, making it the largest spot Bitcoin ETF in the US. On the same day as the Nasdaq filing, six more crypto ETF applications were submitted in the US, including CoinShares’ filings for Litecoin and XRP ETFs and Grayscale’s filing to convert Solana and Litecoin Trusts into ETFs. New filings for a Bitcoin Adopters ETF and an Ethereum Premium Income ETF were also filed.
