Markets
This is why retail investors are abandoning crypto
Retail investors are currently showing notable caution towards the crypto market. This behavior contrasts with past cycles, when their involvement significantly influenced market trends.
Understanding the reasons behind this hesitation is crucial to predicting future market movements.
Retail investors are not there yet
Retail investors are showing reluctance to get involved with the crypto market, a trend that experts say could impact the market’s trajectory. Gustavo Faria, co-founder of Nosy, highlights main metrics that indicate that retail participation remains low.
“A central characteristic of Bitcoin cycle tops is the predominance of coins with a retention period of less than 3 months,” states Faria.
Currently, short-term holders represent about 35% of paid-in capital, compared to more than 70% during previous market peaks. This suggests that long-term Bitcoin holdersOften called “smart money”, they are maintaining their positions, providing a more stable market base.
Bitcoin realized limit. Source: CriptoQuant
Historically, the Spent Output Profit Ratio (SOPR) of short-term holders has exceeded 1.10 during market peaks. In this cycle, the highest SOPR recorded was 1.05, indicating a more neutral market stance.
“This structure suggests that we have not yet reached the peak of euphoria of this cycle”, adds Faria.
He believes the current market is strong, reducing the likelihood of an immediate transition to a bear market and signaling potential for further growth.
See more information: Bitcoin (BTC) Price Prediction for 2024/2025/2030
Additionally, Anthony Sassano, an independent Ethereum educator, grades the peculiar nature of the current bull market, calling it “the strangest of them all.” He points out that the expected four-year cycle appears interrupted, with market behavior driven by cryptocurrencies rather than retail investors.
Sassano highlights the absence of broad market growth, normally fueled by retail participation.
“Retail and new money was and still isn’t here – it’s just crypto natives doing maximum PvP,” he notes.
Adding to this perspective, crypto analyst Cyclop emphasizes the absence of enthusiasm in retail. He highlights that current trading volumes are significantly lower than in 2021, despite The highest price of Bitcoin.
Cyclop suggests that this lack of retail involvement means the market has not yet reached the speculative frenzy seen in previous cycles.
“The normies are not in crypto yet. My friends are not sending me messages on WhatsApp. My mom doesn’t know Bitcoin is on the rise,” she comments.
These insights suggest that retail investors are cautious, possibly due to the state of the crypto market. volatility. This hesitation, combined with current market dynamics dominated by experienced crypto players, could limit the market’s growth potential.
Disclaimer
In adherence to the Confidence Project guidelines, BeInCrypto is committed to impartial and transparent reporting. This news story aims to provide accurate and timely information. However, readers are advised to independently verify the facts and consult a professional before making any decisions based on this content. Please note that our Terms and conditions, Privacy PolicyIt is Disclaimers have been updated.