As the sluggish situation in the cryptocurrency market continues to spread, 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.
For more information, please visit Tuanzi Finance VX: TTZS6308
A look back at the rise and fall of the crypto market from 2021 to 2023
Will retail investors return to the crypto market? This is a question that needs to be closely watched in this round of market cycle, and it is still necessary to review the past development of the market.
2021: Market surges as retail investors pour in
The crypto market has experienced unprecedented explosive growth from March 2020 to November 2021, with the overall market capitalization and major and Altcoin experiencing tens to hundreds of times of surge;
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 broke the camel's back for the crypto market:
Remember, 80% of gains occur in the last 20% of the cycle in terms of time, and it is in this last 20% that retail investors typically flock to the market.
Cryptocurrency is a highly reflexive asset class, higher prices will attract more attention and further drive prices up, but this is also what makes it dangerous:
In 2021, an unprecedented number of people poured into cryptocurrencies when they were everywhere; in 2022, these newcomers suffered their largest losses in history and cast the entire crypto industry under a shadow of scam.
2023: This bull market is different
After a long period of depression, market sentiment began to undergo a major 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 change in the views of large institutions on Bitcoin.
It was not until January 2024 that 12 Bitcoin spot ETFs were officially listed and rewritten history. To date, they have created huge demand and capital inflows of more than US$17.8 billion, pushing BTC to a surge to 73k.
The departure of retail investors and the reasons behind it
As Bitcoin broke through its all-time high, most veterans were expecting the next surge in Altcoin, but nothing happened. In fact, most altcoins went down all the way, and most Altcoin even hit a new all-time low.
Reasons why this market cycle is different from other cycles:
Different driving force: 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 fund flows: External funds flowed to ETFs after their emergence, rather than flowing directly into the market. Past data seems to be less and less useful.
Altcoin are severely divided: too many new coins are launched and not enough new funds are flowing in
Retail investors lose trust: 2022 will severely damage the industry's reputation, retail investors' confidence and funds
The above reasons have caused most retail investors, who are the largest liquidity in the market, to leave the market in exhaustion, resulting in low liquidity in the current market:
The crypto market is no longer like it was in 2021, with a steady stream of new money supporting the market, and we are basically competing for the same money.
What can attract retail investors to return?
Bitcoin hits new all-time high
This may be the only thing that really matters to the crypto market right now. The historic breakthrough in BTC prices will eventually rekindle the interest in cryptocurrencies.
Even if the fundamental problem of severe differentiation Altcoin still exists, the rebound of BTC equals media attention, people will rush to enter the market before the Altcoin rise, and rekindle optimism.
New encryption application scenarios
If cryptocurrencies are to develop sustainably in the long term, stronger encryption technology application scenarios will also be needed. Even though most applications have not yet found their footing, AI, games, DeFi, and RWA are all potential breakthroughs.
For some killer apps to emerge, cryptocurrency only needs 2 to 3 apps to become really popular to promote mass adoption.
It's not late enough
Humans are natural gamblers, and cryptocurrency is already the best casino in the world. Perhaps the reason why retail investors haven’t come back is even simpler, that is, the crypto market has not rebounded:
As mentioned in the previous 80/20 rule, retail investors always come late, and in terms of cycle time, it may be too early relatively speaking.
Be prepared and wait for the right time
Although the crypto cycle in 2024 is fundamentally different from previous ones, perhaps the return of retail investors does not require too much speculation and is always unexpected.
There are good reasons for most retail investors to leave, and for these reasons this cycle is very different from other cycles; however, the return of retail investors usually does not require too many conditions, and that day may even come sooner than you think.
