Across the Seven Seas: Retail, Bitcoin-savvy institutional investors

Institutions have been at the forefront of the crypto bull run since Q4 2020, but now retail investors are also taking center stage. Bitcoin (BTC) is becoming increasingly popular around the world and it officially became legal tender in El Salvador on September 7, making it a milestone for the adoption of the asset by retail and sovereignty. .

However, it turned out to be a chaotic event for the first cryptocurrency token as the country celebrated “Bitcoin Day”. Shortly after the start of the day, the price of BTC crashed over $ 8,000 to hit a low of $ 42,900. Even though this flash crash coincided with this major token adoption event, its importance to retail consumers and investors far outweighs the short-term impact on the token price.

Interesting developments followed in the wake, as Fidelity Investment Director Jurrien Timmer called the adoption a maturity for the gold-like asset in the sixties. In this Latin American country, global food and beverage brands like McDonald’s, Starbucks, and Pizza Hut have now started accepting Bitcoin as a payment option for their products. The wide-scale adoption by brands like these is sure to push retailer interest in Bitcoin and cryptocurrencies as a whole to new heights, as it becomes increasingly clear that it there are real use cases for digital currencies.

Cardano founder and Ethereum co-founder Charles Hoskinson even predicted that many other countries would eventually follow suit with El Salvador’s adoption. Along with him, whistleblower Edward Snowden also rented this decision on Twitter, mentioning that the pressure is now on competing countries to acquire Bitcoin “even if it is only a reserve asset”. Even as major global economies start to consider adopting BTC as legal tender, it will give retail usage a huge boost.

El Salvador’s adoption of Bitcoin was a big part of the cryptocurrency hype and mainstream narrative in late summer. Especially for retail investors, this could often become a case of FOMO (fear of missing out) who, due to constant BTC gains throughout the year, often regret not buying the token a long time ago. number of months. This could result in a huge influx of funds from retail traders in stride.

Retail investors have an eye on crypto

A survey conducted by the Association of Forex Dealers (AFD), a foreign exchange regulator, attempted to gauge investor sentiment on digital currencies in Russia. The survey results revealed that 77% of the 502 investors who participated preferred cryptocurrencies like Bitcoin, Ethereum (ETH) and Litecoin (LTC) to traditional financial assets like gold and forex.

TBEN discussed this comparison to gold further with Jaime Rogozinski, founder of WallStreetBets, a subreddit group designed for retail investors. He said: “Gold stands for store of value in the United States, which holds nearly three times as much gold as the following three countries combined, but global investors have an opportunity to level the playing field with the emergence and unlimited potential of BTC “.

Rogozinski also mentioned that every other player in the global economy except the US has an interest in the US dollar and gold losing the financial hegemony that assets currently hold. When comparing the performance of Gold and BTC, there is a big difference in the results. In the short term, BTC has posted 62.76% year-to-date gains (YTD) and 351.62% annual gains, while gold has posted 5.79% YTD losses and 7.91 % of annual losses.

In addition to Russia, even India is seeing millennials take an interest in cryptocurrency during the global COVID-19 pandemic. Nischal Shetty, CEO of WazirX, an Indian cryptocurrency exchange, told TBEN that from a global perspective, institutional involvement has paved the way for retailer interest in cryptocurrencies:

“The pandemic has had an equal or perhaps greater contribution to accelerating the adoption of crypto, especially in countries like India. In these uncertain times, crypto has provided the common people with new ways to earn online, whether they come from urban or rural areas.

According to data provided by WazirX, the exchange saw a 2,648% increase in the number of users registering in Tier II and III cities in India. Users in these two city segments are responsible for 55% of user enrollment growth in 2021, even surpassing Tier I cities which posted growth of 2.375%. In addition, 70% of platform users are under 35 years old.

The US-based cryptocurrency exchange, CrossTower, perhaps echoed the surge in interest, announcing that they would expand their operations into India and “use the country as a hub to expand into d ‘other geographical areas’.

In a country of 1.36 billion inhabitants, more than 65% of whom are under 35, or more than 880 million, the growth potential of the market is enormous. Data from blockchain analytics provider Chainalysis showed that the amount of funds Indians invested in cryptocurrencies increased by 600% from $ 900 million in April 2020 to $ 6.6 billion in May 2021.

Related: Dreading September? Bitcoin price hopes to break downtrend

A Chainalysis report attempted to rank countries based on their level of retail adoption using a metric known as the Global Crypto Adoption Index. Using this measure, the report found that Vietnam ranked first and India ranked second, closely followed by Pakistan, Ukraine and Kenya.

For Vietnam, confirmation of adoption in tandem with this metric is evident upon a closer look at the transaction volumes and number of users in the country. According to data provided to TBEN by the Binance Research team, the total number of Binance users and trading volumes on all cryptocurrency pairs offered in Vietnam jumped an average of 288.51% to 235.66. %, respectively from January to May 2021. To compare with this growth, Vietnam’s gold reserves only increased by 3.37% during the same period.

Rogonzinski further expressed his opinion on the impact of institutional interest on retail investors, stating, “Institutional investors can afford to weather Bitcoin declines and have more of an eye on long-term gains, but I am confident that each bull run is successful in attracting more retail investors to the market and hopefully teaching them to HODL.

Retail brings numbers, institutions bring movement

An industry analysis report by the cryptocurrency exchange OKEx in collaboration with on-chain data provider Catallact found that despite the growth of small BTC addresses (holding less than 10 BTC), retail investors had a relatively smaller contribution to the overall pool of transactions in the first quarter. 2021.

Data provided to TBEN by Binance Research indicates that looking solely in terms of BTC trading volume, the rebound in BTC price and interest levels could be due to the mix of retail and institutional investors. Between June 2021 and August 2021, Binance saw an increase of 3.29% and 1.36% respectively in the number of retail and institutional investors.

In line with this number, the total number of BTC traded by retail and institutional investors on the exchange increased by 4.61% and 3.99% respectively. During the same period, the overall volume of BTC transactions increased by 1.98%.

The chart shows how an increase or decrease in the number of retail and institutional investors trading BTC on the platform is aligned with the movement of the overall BTC volume. The Binance research team representative added:

“This shift in the mindset of investors from traditional assets like gold or forex to crypto is certainly not limited to developing countries. In fact, it is also prevalent in more developed countries where the sentiment favoring crypto investments is seen more as a move to gain exposure to the emerging asset class, as opposed to just a store of value or a hedge against inflation.

In a discussion with TBEN, co-founder of the Huobi Global cryptocurrency exchange, Du Jun, said the Bitcoin balance on all exchanges is a measure to gauge institutional involvement in the market. . According to data from Glassnode, the amount of Bitcoin held in exchange wallets reached 2.48 million this year, adding, “Bitcoin balances on Coinbase have fallen to around 700,000, the lowest level recorded in the whole of the year. year round. Over the past month, mainstream exchanges have seen net Bitcoin outflows. “

Since most institutions use Coinbase for investing, Jun deduced that institutions bought more BTC in the past month. He also mentioned that large banking institutions like Rothschild and Morgan Stanley have increased their exposure to crypto assets through their holdings in the Grayscale Bitcoin Trust (GBTC).

Institutions investing in Bitcoin or embarking on digital currencies as a payment mechanism are still in their infancy. Thus, the untapped potential of its proliferation of cryptocurrencies into retail investors is well served by the fact that it is led by institutional investors, as it gives retail investors a sense of security, as well as the potential to rise that the hype of the crypto markets is catching.

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