Markets
This is why retail investors are abandoning crypto
Retail investors are currently being very cautious about the crypto market. This behavior contrasts with past cycles where their involvement significantly influenced market trends.
Understanding the reasons for this hesitation is crucial for predicting future market movements.
Individual investors are not there yet
Retail investors are showing reluctance to engage with the crypto market, a trend that experts say could impact the trajectory of the market. Gustavo Faria, co-founder of Nosy, strong points key indicators indicating that retail participation remains low.
“A central feature of Bitcoin cycle highs is the dominance of coins with a holding period of less than 3 months,” explains Faria.
Currently, short-term holders represent around 35% of the realized cap, compared to over 70% at previous market highs. This suggests that long-term Bitcoin holdersoften referred to as “smart money”, maintain their positions, providing a more stable market base.
Ceiling made by Bitcoin. Source: CryptoQuant
Historically, the spent profit ratio (SOPR) of short-term holders has exceeded 1.10 during market peaks. During this cycle, the highest SOPR recorded was 1.05, indicating a more neutral market position.
“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 future growth.
Learn more: Bitcoin (BTC) Price Prediction 2024/2025/2030
Additionally, Anthony Sassano, an independent Ethereum educator, Remarks the particular nature of the current bull market, calling it “the weirdest ever.” He points out that the expected four-year cycle appears disrupted, with market behavior driven more by crypto natives than retail investors.
Sassano highlights the lack of widespread market growth, typically fueled by retailer participation.
“Retail and new money weren’t and still aren’t there – it’s just crypto-natives doing maximum PvP,” he observes.
Adding to this perspective, crypto analyst Cyclop underlines lack of enthusiasm for retail. He highlights that current transaction volumes are significantly lower than in 2021, despite The higher price of Bitcoin.
Cyclop suggests that this lack of retail involvement means the market has yet to reach the speculative frenzy seen in previous cycles.
“Standards are still not in crypto. My friends don’t send me messages on WhatsApp. My mother doesn’t know that Bitcoin has reached an all-time high,” he comments.
This information suggests that retail investors are cautious, perhaps due to developments in the crypto market. volatility. This hesitation, combined with current market dynamics dominated by veteran crypto players, could limit the market’s growth potential.
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