Bitcoin: Don’t Forget About Retail Investors

Bitcoin: Retail Investors Still Play a Huge Role

The Bitcoin community has seen multiple reports and speculations over the last several weeks, all regarding Grayscale’s BTC accumulation, a development which many see as the rise of institutional investors. However, enchanted by developments such as these, people tend to forget that the Bitcoin market is driven by retail investors.

Now, according to a recent research report by ZUBR, Bitcoin retail investors may play a huge role over the next 4 years; this, despite their timid state, at the press time. The report claimed that in April 2020, addresses holding from 1 to 10 Bitcoin surpassed 500,000, adding that these types of addresses have been growing since the beginning of 2018’s bear market.

Although the current Bitcoin circulating supply under these addresses remains a minor 2.5%, the annual growth rate year-on-year for these addresses has been a steady 1% to 1.5%. In addition, the increase in the rate of BTC entities is presented on the charts below.

We can see that unique Bitcoin addresses with less than or equal to 1 BTC consistently rose over the years. However, Bitcoin addresses with less than or equal to 10 BTC appeared a bit inconsistent, despite keeping higher levels.

Is retail vs. institutional still a thing?

To understand what this question is about, we need to look back at 2017. The key reason why Bitcoin plunged from its valuation peak of $20,000 was its high retail investors. Back in December 2017, word of mouth commotion was enough to lure a significant amount of retail investment, something that inflated the price of the cryptocurrency by an exorbitant rate.

After the crash in 2018, however, institutional investors began to register their interest. Affinity started to mount, and many people suggested that Bitcoin will note a higher position post April and May 2020 owing the involvement of institutional traders in the market.

Now, ZUBR’s report noted that retail could potentially account for 50% of the physical supply by 2024. However, that is only possible if retail consumers continue to accumulate at the same rate. Historically, since 2017, a consistent rate of accumulation has been noted, but once Bitcoin crosses $20,000 and stays above it, addresses with 1 BTC might show a decline as well.

Thus, it is difficult to precisely estimate the market share for retail and institutional traders 4 years from now, with regard to the fact that there is no fixation on interest and asset valuation.