Bit (BTC) has successively conquered the milestones of $70,000, $80,000, and then $90,000, and is expected to soon exceed $100,000. However, retail investors are only observing the price fluctuations and do not have investment actions like in previous seasons.
Why does the higher the price of Bit (BTC) go, the more indifferent the retail investors become? From a psychological perspective, this can be explained by different reasons.
The number of new Bit addresses reflects the attractiveness to retail investors
First, to assess the situation, try to observe in parallel the price of Bit and the number of new Bit addresses created. The more new Bit addresses created, the more it shows the influx of new retail investors, reflecting the attractiveness of Bit over each period. These two variables maintain a close correlation throughout the history of Bit prices.
Bit price and the number of new BTC addresses per week. Source: glassnode.However, if we observe the period when Bit exceeded $60,000 to near $100,000, the number of new addresses created per week is only around 300,000 - 400,000, which is equivalent to the period when Bit was below $1,000 in 2016.
In addition, the number of new addresses will tend to decrease when the price decreases. But from the beginning of 2024 until now, the price of Bit has been continuously increasing, but the number of new addresses per week has been declining.
From this, it can be concluded that in 2024, the higher the price of BTC, the more indifferent the retail investors become.
Also Read: Is Bit implementing the effectiveness of game theory?
Psychological reasons to explain the indifference of retail investors to Bit
In reality, it is not that there are no new layers of retail investors entering the market. But the number and enthusiasm in 2024 are less than in 2018 or 2021. A few reasons are as follows:
#1. Limited financial capacity
In Vietnam, Bit has a price close to 2.5 billion VND. Meanwhile, the average annual income per capita of people in the two major cities (Hanoi and Ho Chi Minh City) is 250,000 million VND. This means that for a retail investor to be able to buy a whole 1 BTC, they would have to work for 10 years without any other expenses.
Bit price on the Binance P2P platform. Source: Binance.Although it is possible to buy in small amounts (satoshi), the general psychology still prefers to own "a whole Bit" rather than a small part. And if they only own a small part, investors feel that the profit is not significant. This has somewhat reduced the attractiveness of Bit to individual investors, who are usually those without ample financial resources.
#2. Increased competition from large institutions
When the price rises high, large financial institutions, investment funds, and experienced investors tend to participate more strongly. Not only financial institutions (such as VanEck, Blackrock...) but also countries have racing to accumulate BTC. 93 large entities currently hold 13% of the BTC supply and continue to increase. This creates a feeling that the market is no longer a playground for small individual investors.
Statistics of organizations and countries holding BTC. Source: Bitcoin treasuries.Furthermore, the actions of institutions often cause the market to fluctuate strongly, making small investors feel "helpless".
#3. Lack of confidence in further growth potential
Even if Bit exceeds $90,000, or even if Bit reaches $200,000, retail investors will always be worried and haunted by the magnitude of the declines in the past. When looking at the BTC price chart over each cycle, the decline range is usually -70% to -80%. Therefore, whenever they decide to allocate money, they are cautious and apprehensive. The psychology of "waiting for a price drop to buy" often causes them to miss opportunities and become more indifferent.
Due to these psychological reasons, the higher the price of Bit, the more indifferent the retail investors become. Instead, they are looking for tokens with lower prices and more mentions, rather than buying BTC at the current high levels.
Also Read: Top 10 Cryptocurrency Exchanges Best for Beginners in 2024
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