Some on-chain and technical data suggest that many retail investors may be entering a new “buy the top” phase. This phase could unfold rapidly or require patience, depending on Bitcoin’s price dynamics in the coming days.
**ONLY SMALL CAPITAL INVESTORS REMAIN EXCITED ABOUT THE RISE**
Let’s compare the volatility of the number of Bitcoin wallet addresses categorized by balance. The yellow line represents the number of BTC wallet addresses with less than 1 BTC, representing small retail investors. The red line represents addresses with balances between 1 and 100 BTC, while the blue line represents addresses with over 100 BTC.
Small retail investors have continued to enthusiastically buy in over the past two weeks as BTC fluctuated above $36,500 and even more when BTC surpassed $37,000. On the contrary, investors with larger holdings of 1 to 100 BTC began selling since early October when BTC was just starting to recover from $28,000.
Meanwhile, larger-scale investors (possibly institutional investors) have started showing signs of selling in recent days. Thus, the “greed” mentality remains prevalent among retail investors, but caution is beginning to show among larger or institutional investors.
These on-chain signs are the first reason for the assumption that retail traders/retail investors may be facing a new “buy the top” phase.
**HOW LONG CAN THIS NEW “TOPPING OUT” PHASE LAST?**
Bitcoin has experienced several corrective signals as analyzed above. In the past two days, the BTC price once again made an effort to return to the $38,000 area but was quickly met with strong selling, resulting in a drop of nearly $3,000. This price behavior confirms strong selling pressure at $38,000, and it will require more time and higher liquidity to overcome this price level.
Updating the daily Bitcoin technical analysis with RSI and MACD-H indicators:
The most optimistic scenario for investors who “bought the top” at prices above $37,000 is to expect BTC to trade sideways around the $35,000 support (corresponding to the Fibonacci 0.786 level). BTC holding above this support would demonstrate the general expectations of investors, as they are not willing to sell until BTC reaches over $40,000.
A more pessimistic scenario would involve this support being broken, with a high likelihood of BTC falling to the $31,000 support (corresponding to the Fibonacci 0.5 level). The current investor community seems to be eagerly anticipating this buying zone.
The bearish MACD-H and RSI divergence signals may continue to affect the market in the second half of October, especially as the daily RSI has just broken the uptrend structure from August until now.
The duration of this “topping out” phase will depend on Bitcoin’s price dynamics and the extent of profit-taking by many investors who are currently in a favorable profit position after more than a year of waiting.