Retail trader activity for Bitcoin is at normal levels right now. It's lower than what we've seen during past bull and bear markets, according to data from exchanges like OKX and Binance.

Many analysts believe the market is waiting for retail investors to provide exit liquidity. At the same time, new whales are accumulating BTC from older ones. This behavior often happens before retail traders jump in when Bitcoin prices start to rise.

As we enter October, retail investors are lagging behind institutions in buying Bitcoin (BTC). This month has historically been bullish for Bitcoin, the largest cryptocurrency by market cap. Net inflows from smaller investors remain steady, even as larger investors increase their purchases.

Data from OKX and Binance shows minimal activity compared to the bull markets of 2021 and 2022. In fact, activity is even lower than during the bear market of 2019-2020.

This restraint is surprising. Since 2013, October has only ended in the red twice. The month typically sees gains as high as 60%, with an average gain of 22%. It’s been the best month for investor returns. Recently, fewer than 40,000 wallets have been active each day on these exchanges. That’s even less than during the bear market when Bitcoin was below $10,000, and active wallets numbered around 50,000 a day.

These trends align with other indicators, such as the popularity of the Coinbase mobile app and on-chain usage.

“We’re in the middle of a bull cycle, waiting for retail exit liquidity, while new whales are accumulating BTC from old whales,” said CryptoQuant founder Ki Young Ju in a post on X.

Retail traders, often called individual traders, buy and sell assets for their personal accounts. On the other hand, institutional traders manage accounts for groups or institutions. They’re often referred to as “whales” because of their significant market influence. Retail traders are usually seen as less informed or more emotional compared to institutional investors. A big influx of retail money can indicate bullish sentiment, suggesting that prices will rise.

However, extremely high retail inflows might signal an overheating market. This could mean we’re nearing the end of a rally or market cycle. Early signs of rising retail inflow might suggest the end of a bear market and the start of an accumulation phase. Sudden spikes in retail buying can sometimes come before market peaks, followed by corrections when these investors start selling out of fear or to take profits.

“Retail traders usually enter when the BTC price is skyrocketing and reaching an all-time high,” Ki added.