The cryptocurrency market seems to be in a never-before-seen predicament right now. Bitcoin (BTC) is near its all-time high, facing substantial resistance at the $108,000 price point. From the outside, it would appear that investor sentiment may be high. But a deeper investigation shows that most of the inflows are from financial institutions, via spot ETFs. Retail players may be in hibernation this cycle.
Retail Investors Staying Away From The Cryptocurrency Game?
Source: Watcher.GuruOn-chain data shows that small wallet activity is at its lowest in several years. Small investors may still not have recovered their sentiment. Global geopolitical tensions and trade wars may have spooked retail players away from risky assets. The cryptocurrency market is subject to heavy speculation. The overarching bearish sentiment may have led retail players to stay at bay.
It is also possible that retail investors are waiting for an interest rate cut before making risky investments. The Federal Reserve decided to keep interest rates unchanged after its last meeting. President Trump has publicly asked Fed Chair Jerome Powell to cut rates as soon as possible. The cryptocurrency market could see a spike in inflows if rates go down.
There is also a possibility that retail players are indirectly participating in the cryptocurrency market via spot ETFs. The inflows around Bitcoin (BTC) and Ethereum (ETH) ETFs have been incredible over the last month. ETF inflows have been consistent even during times of distress. The Israel-Iran conflict did not seem to bother ETF inflows.
Also Read: Analyst Claims Bitcoin Undervalued at $108,000: New Peak Soon?
Currently, the cryptocurrency market seems to be hinging on ETF inflows to maintain its price levels. We may see a much more significant price rally if retail players reenter the market. It is most likely that we will see more retail action once interest rates go down and borrowing becomes easier.
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