These four signs suggest retail investors want Bitcoin and crypto ๐จ This article is 5 years old...
These four signs suggest retail investors want Bitcoin and crypto
3 min read
Updated: Feb. 24, 2020 at 8:10 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
It isn’t a secret that capital inflows from retail investors are what drove Bitcoin’s previous bull runs; if you were around for the 2016-2018 cycle, you likely remember the mania on mainstream media regarding cryptocurrency, the conversations with your friends and family about the blockchain flavor of the week, and so on and so forth.
When BTC started crashing, however, retail investors were quick to exit. This was exemplified by the few mainstream media segments covering cryptocurrency, the absence of mentions of “Bitcoin” and “blockchain” on social media, and an overall decrease in interest seen on Google Trends and in data from industry content publishers.
It was no surprise, then, that without the fiat inflows, Bitcoin plunged 80 percent to $3,150, depressed by sell-side pressure from miners who continued to hash away for coins amid the bear market.
Fortunately for bulls, four pieces of evidence suggest that retail investor interest in cryptocurrencies is back on the rise, boding well for the long-term bull trend that analysts hope is in the midst of forming.
Evidence #1: everyone wants to buy Grayscale’s Bitcoin Trust (GBTC)
According to data shared by The Block’s Frank Chaparro, Grayscale’s Bitcoin Trust, which trades over the counter (not on established stock exchanges) under the ticker “GBTC,” is the second-most active stock on leading U.S.-based OTC markets in 2020.
Grayscale's GBTC is the second most active stock on leading U.S. OTC market in 2020 @_RJTodd
– Inflows up to $194m in Q4 2019
– 2nd most actively traded product in US OTC markets
– Grayscale AuM (all products) down from all time high of $2.7bn to ~$2bnhttps://t.co/LE9cb7RKBp pic.twitter.com/R5FYy3zmLp— Frank Chaparro (@fintechfrank) February 21, 2020
While Grayscale’s investor base is dominated by institutional investors, a number of commentators on Twitter have noted that GBTC’s strong premium to spot BTC, coupled with the increase in volumes as depicted above, is a clear sign that mom-and-pop investors are once again clamoring for cryptocurrency exposure.
Indeed, retail investors are more likely to buy GBTC at a high premium than institutions, who can access Bitcoin through established futures markets like the CME or through institutional service providers like Fidelity Investments.
Evidence #2: increased volume on Coinbase
Similar to the above evidence, data shared by industry researcher Larry Cermak shows that Coinbase’s average daily volume has shot up in February, which has historically been a “really good sign [for] the market.”
The numbers indicate that the exchange saw an average of $342.46 million worth of trading volume every day in February thus far. $342.46 million is nearly three times that of the average seen in December 2019.
Volume in February is continuing to shoot up. That's historically a really good sign about the market. It's almost at the same level as in May now pic.twitter.com/QSDtiMp3sE
— Larry Cermak (@lawmaster) February 20, 2020
This is important because Coinbase is the go-to platform for retail investors, per CryptoSlate’s SimilarWeb analysis of competing exchanges in Bitstamp and Kraken; the fact that volumes are strongly surging on this very platform bodes well for the bullish narrative.
Evidence #3: Google Trends data suggests increased interest for a swath of cryptocurrency-related terms
Data from Google Trends, Google’s data provider for search trends, suggests that there is a growing level of interest from the internet for a number of search terms related to cryptocurrency, including digital asset investing.
Late last month, analyst CryptoKea noted that search interest for “Buy Bitcoin” just recently reached a seven-month high, reaching a level of “10” per his analysis. This is important because a strong uptick in interest for the aforementioned term, which most attribute to consumers, not institutions, marked the start of 2017’s effectively parabolic rally to $20,000.
1/ Googling for "Buy Bitcoin" just reached a 7 months high (Score 9). The long-term upwards trend is undeniable. The last time the score reached a 10 was:
Nov '13 (bull top),
May '17 (price on parabolic run-up),
Jun '19 (medium-term top)
>Feb '20 (price on parabolic run-up?) pic.twitter.com/tkdXIEvM3Q— CryptoKea (@CryptoKea) January 20, 2020
Not to mention, CryptoSlate found that interest from Googlers in “altcoin,” “Bitcoin halving,” “Ethereum,” amongst other terms, have started to grow.
Evidence #4: mainstream coverage of crypto on the rise
This piece of evidence is largely anecdotal, but this writer has noticed a strong uptick in mainstream media outlets (CNN, Bloomberg, Barron’s, Financial Times, etc.) covering Bitcoin and the broader industry.
Case in point, CNN earlier this month released an article about Bitcoin’s surge to $10,000, trying to give its readers insight into the revival of this embattled market. Also, CNBC has covered the cryptocurrency almost every day over the past few weeks, making this writer think back to the top of 2018’s mania, when CNBC TV covered cryptocurrencies in four separate segments in a single day.
Like all media, these mainstream outlets cover what their readers want to read, meaning more Bitcoin articles equals more interest from the public in Bitcoin.
Bitcoin Market Data
At the time of press 8:10 pm UTC on Feb. 24, 2020, Bitcoin is ranked #1 by market cap and the price is down 2.67% over the past 24 hours. Bitcoin has a market capitalization of $175.12 billion with a 24-hour trading volume of $43.6 billion. Learn more about Bitcoin ›
Crypto Market Summary
At the time of press 8:10 pm UTC on Feb. 24, 2020, the total crypto market is valued at at $277.8 billion with a 24-hour volume of $153.78 billion. Bitcoin dominance is currently at 63.06%. Learn more about the crypto market ›
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Grayscale Investments
Established in 2013 by Digital Currency Group, Grayscale Investments is a trusted authority on digital currency investing and cryptocurrency asset management.
Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.