Coinspeaker
Bitcoin Rally Falters as Retail Investors Stay on Sidelines
Bitcoin, the leading cryptocurrency, has achieved a remarkable feat in the first quarter of 2024, reaching its new all-time high of $73,750. However, a curious trend has emerged: despite this surge, retail investors, who were the driving force behind the 2021 crypto boom, are largely remaining on the sidelines.
This muted response from retail traders stands in stark contrast to the previous bull run. In 2021, a combination of factors, including COVID-driven lockdowns, readily available cheap money, and a surge in “meme stock” trading, fueled a frenzy of retail investment in Bitcoin and other digital assets.
The current rally, however, feels distinctly different. The days of wild speculation and social media-driven buying sprees appear to be behind us. Instead, a more institutional presence is guiding the uptrend. The recent launch of US Bitcoin exchange-traded funds (ETFs) is seen as a key driver, providing a regulated and familiar investment vehicle for institutional investors.
“It’s the million-dollar question in crypto right now – when will retail traders come back?” said Michael Rinko, an analyst at Delphi Digital.
Bitcoin’s Retail Retreat
Several factors may have led to the drop in retail interest. The harsh 2022 crypto downturn, where Bitcoin stayed around $20,000-$30,000, likely made many small investors afraid. The collapse of major crypto firms like Three Arrows Capital, Celsius Network, and FTX also hurt trust, with billions of customer money lost to fraud and platform failures.
“The key force behind the reduced activity stems from lessons learned throughout the harrowing year that was 2022,” says Vetle Lunde, analyst at K33 Research. “The contagion and collapse of a vast portion of retail-facing lending platforms illustrated that considerable risks were hiding behind the attractive yields.”
This new caution seems to show a shift in investors’ sentiment. Instead of chasing the latest trends, there is more focus on safety and the basics of assets. People are now much more concerned about finding a secure and safe asset to put their money in, says John Glover, the Chief Investment Officer at the crypto lending platform Ledn.
Retail Investor Sentiment
Whether and when retail investors will return to the fray remains to be seen. Bitcoin’s recent volatility, with over 16% drop from its mid-March peak, serves as a stark reminder of the inherent risks involved with this asset class.
The concept of a price target for Bitcoin has been a subject of widespread discussion within the crypto community. Rinko, a prominent figure in the industry, has expressed the view that Bitcoin needs to reach the $100,000 mark to attract mainstream retail investors back into the market.
Photo: TradingView
According to TradingView, Bitcoin is currently trading at the price of $61,752, marking a 1.88% decline in the last 24 hours. Bitcoin is still struggling with its crucial support level of $61,000. If BTC successfully breaks the $61K support level, then it could touch the $65K price level.
