Bitcoin Breaks Record, But Retail Investors Remain Pessimistic — Why That’s a Good Sign

Small retail investors are standing aside or completely withdrawing despite Bitcoin (BTC) reaching a new All-Time-High and maintaining above $111,000 after seven weeks of accumulation.

Institutional cash flow and whale accumulation have pushed prices higher, but many small traders have been liquidated during this price surge.

Market Growing Amid Retail Investor Skepticism

According to data from Coinglass, over 114,500 traders were liquidated in the past 24 hours, causing losses of up to $515.34 million.

The largest single liquidation occurred on HTX, with a BTC-USDT position worth $51.56 million being wiped out.

These forced liquidations, mainly from over-leveraged longing and short positions, show the market remains highly volatile even as prices break out.

However, Santiment pointed out a deeper trend, showing retail investor surrender. According to the on-chain analysis company, Bitcoin wallets holding small amounts of BTC have sold to whales. Historically, this behavior pattern often occurs before strong price increases.

"Bitcoin prices tend to surge more when the number of small wallets decreases and whales accumulate," Santiment's on-chain analyst Brian said.

This data aligns with broader market sentiment. Many small retail investors have withdrawn in recent weeks, citing reasons of frustration, distrust, or fear of being scammed.

Ironically, this surrender might have marked the entry of smart money. The market currently appears to be growing in what analysts call an "unbelieving rally", a phase where profits continue despite widespread skepticism.

"...many small retail investors have withdrawn due to frustration or distrust in recent days. History has shown this is a key indicator of a potential breakout, as the cryptocurrency market often moves contrary to crowd expectations," Brian added.

Veteran trader and analyst Michael Van de Poppe agreed with this perspective in a recent post, emphasizing that most traders tend to be pessimistic when a market rally begins.

"At the start of a market rally, 99% of people will remain pessimistic. Next month, you'll continue hearing that this price surge is fake on altcoins. That's part of this cycle," the analyst commented.

Despite Bitcoin reaching a new ATH and strong ETF cash flow, sentiment on cryptocurrency forums and social media remains cautious.

Similarly, the Crypto Fear & Greed Index is beginning to lean towards greed but has not yet reached euphoria.

Analysts suggest that when FOMO appears, the number of holders will increase again, especially if altcoins start catching up with Bitcoin's performance.

Currently, the disconnect between rising prices and small investor skepticism may be setting the stage for the next phase of market growth. If history is a guide, small investor distrust could be the ultimate driver for Bitcoin's continued escalation.