Bitcoin did not hold the $97,000 mark as its funding rate stalled and retail traders watched from the sidelines. Will TradFi Reignite Rally to $100,000?
Key Takeaways:
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Retail traders remain on the sidelines despite BTC's recovery as low funding rates and muted interest point to weak investor sentiment.
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Institutional investors are buying spot Bitcoin ETFs again and company buyers constructing BTC treasuries could help bring BTC back to $100,000.
The price of Bitcoin (BTC) stabilized around $95,500 on Thursday after a three-day 8% rally worn out $465 million briefly BTC futures positions. But in accordance with web search and derivatives metrics, retail traders remained on the sidelines. Bitcoin’s decline from $97,900 can have further weakened investor sentiment.
Annualized funding rate for Bitcoin futures. Source: Laevitas.ch
The Bitcoin perpetual futures funding rate stood at 4% on Thursday, indicating limited demand for bullish positions. Under neutral conditions, the indicator is usually between 8% and 12% to balance the associated fee of capital. These derivatives are the popular instruments of retail traders because their prices closely follow the spot market, unlike monthly BTC contracts traded on the CME.
Institutional Bitcoin purchases are offsetting weak interest from retail investors
The tech-heavy Nasdaq index traded just 1.6% below its all-time high on Thursday as traders grew more confident after chipmaker TSMC reported a 35% rise in quarterly profits. However, despite Bitcoin's recent gains, its current value of $95,500 continues to be 25% below its all-time high of $126,219. More importantly, overall interest within the cryptocurrency market has declined.
Worldwide Google search volume for “Bitcoin”. Source: Google Trends
Google Trends data shows that global search interest for “crypto” is at 27 on a scale of 0 to 100, not removed from the 12-month low of twenty-two. Retail traders are inclined to chase recent winners, especially with silver prices up 28% in two weeks. Bitcoin has long been considered a direct competitor to precious metals, but crypto traders typically concentrate on short-term performance.
Silver/USD (left) vs. Bitcoin/USD (right). Source: Tradingview
Some of Bitcoin traders' skepticism will be attributed to sociopolitical risks and concerns about maintaining the Federal Reserve's independence.
The U.S. Justice Department's criminal investigation into cost overruns related to the Federal Reserve constructing renovation has raised concerns about whether the Trump administration is pressuring the Fed to chop rates of interest. Fed Chair Jerome Powell's mandate ends in April, leading traders to expect stronger stimulus measures within the second half of 2026.
Bitcoin has yet to prove itself as a reliable hedge during times of economic turmoil, and in consequence, retail traders fear that even with gains in stocks and precious metals, the cryptocurrency market could suffer probably the most in a downturn.
Adding to tensions, US President Donald Trump threatened retaliation against Iran over its violent response to anti-government protests. Iran produces greater than 3 million barrels of oil and controls a key global bottleneck for tanker flows. The heightened uncertainty follows a US military operation on January 3 that captured Venezuelan President Nicolas Maduro.
Market cap of the US-listed Bitcoin ETF, USD. Source: CoinGlass
The lack of interest from retail traders isn’t a death sentence because the Bitcoin spot exchange traded fund (ETF) industry is value over $120 billion. Public corporations proceed to follow Michael Saylor's (MSTR US) strategy playbook and have purchased greater than $105 billion value of Bitcoin. Demand from institutional investors gained momentum through 2025 and will ultimately be the deciding think about a sustained uptrend towards $100,000.
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