Retail Investors Are Back in Crypto Markets

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Retail Investors Are Back in Crypto Markets

A well-known figure has returned to the bitcoin sector. Retail investors are returning to the crypto ecosystem for a second round, enticed by the potential of fast returns in a quickly growing asset class. Retail investors drove the 2017 bull run in cryptocurrency markets. Their presence at the time contributed to the mainstreaming of Bitcoin (BTCUSD) and increased its price volatility. However, the circumstances this time may be different.

Key Takeaways

  • Retail investors, who drove the initial cryptocurrency bull run, are making a return in the ecosystem.
  • Unlike the last time they left after making a profit, individual investors may be in it for the long haul this time.

More Users and Trading Volumes

Following a more than two-year price slump, Bitcoin has become a popular investment instrument with mainstream investors due to internet platforms. Google searches for Bitcoin have reached crypto-mania levels, and hot Twitter topics have helped spotlight the cryptocurrency’s price increases. eToro, a cryptocurrency trading website, announced 200,000 new members in the first week of 2019.

In comparison to last year, the business reported that it had 61% and 49% more unique Bitcoin and Ether (ETHUSD) holders, respectively. Trading volumes at the Israel-based business increased tenfold when compared to the same period previous year.

In the United States, many notable exchanges, including Coinbase and Kraken, experienced disruptions as a result of an increase in interest in bitcoin trading at their venues, some of it likely from new customers. Revolut, a banking and trading app located in the United Kingdom, has seen an increase of 300,000 new crypto clients in the last month. Meanwhile, PayPal Holdings, Inc. (PYPL), which debuted cryptocurrency services for its customers last year, is said to have just passed $242 million in crypto sales, a record.

  Proof of Activity

Another Repeat of 2017?

Some analysts see the arrival of retail investors and PayPal figures as evidence of cryptocurrency widespread acceptance. However, it may be a stretch. Retail investors and traders left cryptocurrency markets after profiting during the last bull run. They could do the same thing again this time. Because Bitcoin transactions are pseudonymous, genuine identities are masked by crypto addresses that may or may not belong to the same person, analysts should temper their appraisal of crypto numbers with a fair dose of skepticism.

Although the cryptocurrency environment seems to be identical to that of 2017, its basic principles have altered. Small transactions by individual investors increased Bitcoin’s price volatility during the last bull run in crypto markets. Without any underlying liquidity, prices fluctuated erratically, rising and falling alternatively as traders transferred money in and out of the crypto ecosystem.

The present bitcoin price surge has happened in a different environment. Institutional investors are slowly but steadily entering the crypto industry. Their existence has provided much-needed liquidity to cryptocurrency markets, making them less vulnerable to huge price movements caused by minor deals.

This time around, the regulatory barriers for individual investors to dabble in Bitcoin are considerably stiffer. For example, the Financial Conduct Authority (FCA) of the United Kingdom launched a temporary registration framework last month to allow investors to check if crypto trading businesses are registered with the regulator. In the United States, the Office of the Comptroller of the Currency (OCC) has issued notices favorable to cryptocurrencies, and a new SEC chair familiar with blockchain and cryptocurrencies is expected to replace former chair Jay Clayton, who was widely reviled by crypto enthusiasts for his harsh statements about cryptocurrencies.

  Crypto ATM

All of this suggests that regular investors are unlikely to abandon crypto markets very soon.

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