As the coldness of the cryptocurrency market continues to spread, crypto analyst Miles Deutscher points out that the current "retail investors" have left the market, making the market cycle in 2024 full of variables, and when retail investors and external funds will return has become a key issue .
Table of Contents
ToggleLooking back at the rise and fall of the crypto market from 2021 to 2023
Miles Deutscher titled " Will retail investors return to the crypto market? ", emphasizing that this is an issue that requires close attention in this market cycle, and it is still necessary to review the past development of the market.
2021: The market surges and retail investors pour in
First of all, the crypto market has created unprecedented explosive growth from March 2020 to November 2021. From the overall market value to various mainstream and Altcoin, it has created a surge of tens to hundreds of times; Deutscher attributes this to the home quarantine. , the supply of a large number of tokens and incentives is the result of "retail investors" and "external liquidity".
2022: Bubble burst hits retail investors hard
Soon, the carnival ended in the first half of 2022, and the collapse of the algorithmic stablecoin protocol Terra/Luna became the last straw that crushed the encryption market:
Remember, 80% of returns occur in the last 20% of the cycle in time, and it is during this last 20% that retail investors typically flood into the market.
( The past and future of DeFi stablecoins: written after the collapse of Terra UST )
Deutscher admitted that cryptocurrency is a very reflective asset class. The higher the price, the more attention it will attract and further push the price upward. However, this is also the reason why it is dangerous:
2021 saw an unprecedented influx of people into cryptocurrencies, when they were everywhere; in 2022, these newbies took on some of the largest losses ever and cast a shadow of scam over the entire crypto industry.
He added, "At that time, retail investors, whether hit or not, left the market with the bear market and caused serious damage to the reputation of the entire industry."
2023: This bull market is different
After a long period of downturn, market sentiment began to undergo a significant shift in mid-2023.
In June 2023, BlackRock, the world's largest asset management company, announced that it had applied for the listing of a Bitcoin spot ETF:
This not only symbolizes the emergence of a potential market catalyst, but also represents a fundamental shift in the view of Bitcoin by large institutions.
Until January 2024, 12 Bitcoin spot ETFs were officially launched and rewrote history. So far, they have created huge demand and capital inflows of more than 17.8 billion US dollars , pushing BTC to soar to a price of 73k.
The departure of retail investors and the reasons behind it
However, as Bitcoin broke through all-time highs, most veterans were anticipating the next wave of Altcoin surges, but nothing happened.
Deutscher summarized several reasons why this market cycle is different from other cycles:
Different thrust : The main driving force of the current cycle is BTC ETF, which is very different from the previous cycle driven by macroeconomic conditions.
- Changes in the flow of funds : External funds flowed there after the emergence of ETFs instead of directly flowing into the market. Past chart data seems to be less and less useful.
Altcoin are seriously divided : too many newly launched currencies and insufficient new capital inflows
- Retail investors lose trust : 2022 will severely damage the industry’s reputation, retail investors’ confidence and funds
He said that for the above reasons, most of the retail investors, who are the largest liquidity in the market, have left the market tiredly, making the current market liquidity sluggish:
The crypto market is no longer what it was in 2021, with a constant stream of new money to support the market, we are basically all competing for the same money.
What can attract retail investors to return?
However, Deutscher also gave several factors and background that are conducive to the return of retail investors:
Bitcoin hits all-time high
He admitted that this may be the only thing that is really important to the encryption market now. The historic breakthrough of BTC price will eventually revive the outside world’s interest in cryptocurrency:
Even if the fundamental problem of serious Altcoin differentiation still exists, BTC’s rebound equals media attention. People will rush to enter the market before the Altcoin rises and rekindle optimism.
New encryption application scenarios
He went on to say that if cryptocurrency is to develop sustainably in the long term, stronger encryption technology application scenarios are also needed. Even though most applications have not yet found their foothold, including AI, games, and DeFi They are all potential breaches:
I'm hoping there will be some killer app, cryptocurrencies will only need 2 or 3 apps to really become popular to spur mass adoption.
It's not late enough
He said that human beings are natural gamblers, and cryptocurrency is already the best casino in the world. Perhaps the reason why retail investors have not come back is simpler, that is, the encryption market has not rebounded yet:
As mentioned in the previous 80/20 principle, retail investors always come late, and in terms of cycle time, we may be relatively too early.
Deutscher: Be prepared and wait for the opportunity
Deutscher also emphasized at the end that although the encryption cycle in 2024 is fundamentally different from the previous one, perhaps the return of retail investors does not require much speculation and is always unexpected:
There are good reasons for most retail investors to leave, and it is for these reasons that this cycle is very different from other cycles; however, retail investors usually do not need many conditions to return, and even that day may be longer than you think. Come earlier.
