- Retail interest in crypto is still muted despite Bitcoin price rally.
- Big money investors are driving Bitcoin’s march to a new peak.
- Will retail make a late entry into the market this cycle?
Bitcoin’s surge last month was unusual — retail traders weren’t riding the gains.
Retail crypto activity has been muted, a phenomenon logged by consumer-focused apps including PayPal and Coinbase, as well as by research firm CryptoQuant.
Instead, whales and institutional investors are driving Bitcoin’s momentum. Larger market participants now account for a greater share of the crypto market.
Big-money players are piling into spot Bitcoin exchange-traded funds in the US: They account for two-thirds of the $24 billion flows into the investment vehicle since its inception.
Here’s what’s causing the retail crowd to shy away from Bitcoin.
Perennial latecomers
Retail investors are historically late to crypto’s boom/bust cycle.
Given their absence, market observers can deduce that the crypto cycle is still in its early days, Noelle Acheson said in her “Crypto is Macro Now” newsletter.
Bitcoin has come close to equalling its all-time high price above $73,000, but retail interest as measured by indicators such as internet search interest and crypto app downloads is still at its lowest levels.
Join the community to get our latest stories and updates
“Retail investors on the whole tend to be ‘late adopters,’ motivated by price-related headlines and social interest,” Acheson wrote. “We’ll know we’re nearing peak hype when retail is ‘piling in.’”
Chasing memecoins
Retail traders might not be piling into the big cryptocurrencies, but that doesn’t mean they are completely sidelined.
Memecoins have risen to prominence this year to reach a market size of $61 billion, primarily driven by retail traders.
Retail trading volume for memecoins has grown fivefold in 2024 year over year.
There’s a simple reason why ― memecoins have become much easier to make thanks to generators such as pump.fun.
Memecoin generators like pump.fun automate the cryptocurrency creation process allowing thousands of tokens to be created per day.
Their emergence has fuelled a speculative memecoin trading frenzy that has even spawned a new fringe sector, one populated by AI cults.
Altcoin slump
While institutional investors have driven Bitcoin this cycle, the same trend hasn’t materialised for altcoins, which due to their unclear regulatory status are usually dominated by retail investors.
Smaller investors have been hurt by massive altcoin token unlocks and the concentration of liquidity in a shrinking number of tokens, data tracker Kaiko noted.
What’s more, Bitcoin and the larger crypto market have become less correlated this cycle.
Apart from a few outliers including Solana, Dogecoin, BNB, and Tron, most notable altcoins have failed to replicate Bitcoin’s price rally this year.
Their loss has been memecoins’ gain as meme tokens now account for almost one-third of the 50 biggest altcoins. Last year, meme tokens only represented 7% of that group.
DeFi tokens have also faced significant losses this year. DeFi tokens including Uniswap and Sky — formerly Maker — have slumped more than 50% since March.
DAO apathy, a lack of interest in DAO governance participation, has also contributed to the decline in DeFi tokens which are themselves governance tokens.
Investors not keen to engage in DAO governance sell these tokens to recoup a portion of their investment, Dennison Bertram, co-founder of onchain governance platform Tally, previously told DL News.
DAO treasuries have declined by 50% to $21.4 billion since March mostly due to the slide in DeFi token prices.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.
