Bitcoin
Retail Traders Stay Out of Bitcoin Rally
By Medha Singh
(Reuters) – What happened to the army of retail traders who used to power bitcoin’s biggest rallies?
US crypto exchange Coinbase reported just $56 billion in consumer trading volumes in the first quarter of 2024, as bitcoin jumped to record levels near $74,000.
While this represents an incipient recovery in retail interest – almost double the level of the final quarter of last year – it is far below the quarterly average of $133.75 billion during the last comparable recovery in 2021.
The retail investor was in charge of that wild ride of 2021, as COVID lockdowns, cheap money and personal savings drove up “meme” stock prices and generated bouts of intense FOMO, or fear of missing out. On the other hand, the latest rally was a more solemn institutional affair, driven by the birth of bitcoin exchange-traded funds in the US.
“It’s the million-dollar question in crypto right now – when will retail traders return?” said Michael Rinko, analyst at Delphi Digital.
In another sign of retail retreat, Google trends data shows that search interest in the term “bitcoin” in March was just half the peak in 2021.
Some small investors are still weathering the chills of the more than two-year-old crypto winter when bitcoin remained weak at levels between $20,000 and $30,000.
Billions of client funds were also trapped in the implosion of high-profile crypto companies, including Three Arrows Capital, Celsius Network and FTX, whose founder Sam Bankman-Fried was sentenced to 25 years in prison for fraud.
“The main force behind the reduction in activity stems from lessons learned throughout the harrowing year that was 2022,” said Vetle Lunde, analyst at K33 Research.
“The contagion and collapse of a large portion of retail-oriented credit platforms illustrated that considerable risks were hidden behind the attractive yields.”
Some market participants assess that bitcoin, which represents more than half of the $2.26 trillion digital asset market capitalization, will be hit by a period of rotation as investors take profits from the currency and decide to buy altcoins. riskier, like no. 2 cryptoether and others.
In fact, Ether lags behind its biggest rival Bitcoin and has yet to surpass its 2021 peak.
“Rather than just blindly jumping into crypto on whatever seems to be hot at the moment, people are now much more focused on what is a safe and secure asset to invest in,” said John Glover, chief investment officer at the crypto trading platform. Ledn crypto loan.
It remains to be seen if or when speculative crypto traders will return to the market in force.
The story continues
At the moment, bitcoin’s drop to $62,809, 15% below its mid-March high, is serving as a reminder of the sharp volatility and risk that comes with the asset.
“The meme in crypto is: Bitcoin needs to hit $100,000 for retail to come back,” said Rinko of Delphi Digital. “Who knows if that’s the magic number, but we need to get to a number that really ignites FOMO.”
(Reporting by Medha Singh in Bengaluru; Editing by Vidya Ranganathan and Pravin Char)