Beneath the calm surface of BTC/USD lie turbulent underwater currents that are reshaping the cryptocurrency market structure.

Still waters run deep. On the surface, it seems that life in the Bitcoin market has quieted down. For several months now, BTC/USD prices have been wandering within a relatively narrow trading range, and volatility has dropped to its lowest level in two years. However, beneath the surface, life is bustling. The cryptocurrency is constantly changing hands, fundamentally transforming the digital asset market.

According to Flipside Crypto calculations, back in 2020, 2% of addresses held 95% of the circulating Bitcoin supply. These addresses are known as crypto whales. They typically include miners, offshore funds, and anonymous wallets. Due to such a high concentration of the market, even small token sales caused significant price fluctuations. According to 10x Research, outflows of 2% and 9% from crypto whale wallets in 2018 and 2022 caused BTC/USD prices to drop by 74% and 64%, respectively.

Over the past 12 months, these holders have offloaded 500,000 bitcoins worth $50 billion. However, all these digital assets have landed in the hands of large institutional investors: ETFs, Strategy, and similar companies. Over the last 5 years, Michael Saylor's venture has increased its Bitcoin reserves by $65 billion. Specialized exchange-traded funds have gathered about $50 billion since their inception.

Bitcoin flow dynamics from various wallets

According to 10x Research, institutional investors have absorbed 900,000 coins over the past year. They own about 4.8 million bitcoins out of the 20 million in circulation—roughly a quarter. These players act more consistently and logically. It is no surprise that as the market structure changes, its very nature evolves.

Data from BTC Deribit shows that the 30-day implied volatility of the crypto market has dropped to its lowest level in two years. Bitcoin increasingly resembles a traditional asset, for which a 10-20% annual gain is normal. This is significantly lower than the 1,400% rally in 2017, which made the digital asset leader mainstream.

Thus, changes in the crypto market structure reduce the likelihood of sharp spikes and crashes. There is no longer a reason to buy Bitcoin merely because it is rising. But there is good news: the digital asset has survived and is passing into institutional investors' hands. Its dynamics can now be forecast based on shifts in global risk appetite and the behavior of other assets. This means BTC/USD is here to stay, for the long term. There is no need to fear that these tokens are just a pyramid scheme that will soon disappear.

Technically, on the daily Bitcoin chart, the risks of forming a Broadening Wedge pattern still exist. A break below 110,500 followed by a fall beneath this level would be a selling signal. Similarly, a drop of BTC/USD below the fair value at 107,500 would trigger a secondary reversal pattern 1-2-3.