Retail investors are taking a stronger interest in cryptocurrencies, a new report from crypto intelligence firm Bitcoin Uncharted reveals.
In late December visits to the website’s of the top four crypto exchanges tripled as retail investors explore the crypto world. Data from Google Trends also shows that searches for ‘Bitcoin’ spiked in December.
While retail investors are only just now breaking into the crypto world, institutional investors who have been circling crypto this year began doubling, or even tripling, down on investments over the past several months. Grayscale investments bought nearly $260,000 worth of Bitcoin in the second half of 2020 for their BTC Trust, dramatically increasing their BTC holdings.
While the crypto world is seeing an influx of new investors, it is also seeing new trading patterns. BTC and ETH’s futures vs spot volume ratio has increased over the past several months, Bitcoin Uncharted data shows.
Ethereum’s recent shoot from the $750 price level to $1,000 was likely due to a high number of short positions being liquidated, which created an environment which would have been difficult to replicate in a spot-dominated marketplace. Bitcoin short position liquidations also accelerated the pre-Christmas price hike.
Investors at Bitcoin Uncharted suggested that watching out for where the exercise prices will consolidate in February will be important for determining what Bitcoin’s price action may be. Report authors are bullish on Bitcoin, pointing to a drastic reduction in liquid Bitcoin supply as a strong indicator for the cryptocurrency.
Currently about 14.6M out of the 18.6M issued bitcoins (78%) are either lost or being hodled long term, leaving less than 4M bitcoins to be shared amongst future market entrants (incl. Paypal, Square, SP500 Companies, ETF’s, etc), the report highlighted. Authors also shared that the size of Bitcoin withdrawals have grown, indicating that larger investors have entered the field.
“Accumulation during 2019 was heavily dominated by withdrawals between 10 -100 bitcoins, while as of march 2020 the ticket sizes were predominantly between 100–1000 bitcoins,” the report noted. “This indicates that this time is indeed different as the rally was supported by much larger buyers.”
By Emily Mason