Boosted by the approval of Bitcoin spot ETF, the cryptocurrency market continues to rise, according to Bloomberg analysis. Looking at the latest financial reports from Coinbase and Robinhood, it can be seen that retail investors are returning to the market, but they have not fully participated yet. Analysts believe that there is still a lot of room for retail capital to flow in.
The financial reports released by the US-listed cryptocurrency exchange Coinbase last week showed that its consumer net trading revenue increased by 60% YoY and 80% QoQ in the fourth quarter of last year. The financial report of online broker Robinhood also showed that the nominal trading volume of cryptocurrencies in December last year increased by up to 242% compared to the same period last year.
According to Bloomberg’s report, these latest signs indicate that retail investors, who suffered losses of billions of dollars in the cryptocurrency market crash in 2022, have started to return to the market due to the frenzy caused by the approval of Bitcoin spot ETF last month. Retail investors are extremely important to the cryptocurrency market. During the last bull market, retail investors accounted for the largest proportion of Coinbase’s revenue and were also the main driving force for most other cryptocurrency exchanges.
It is worth noting that retail investors have not fully invested in the market like they did during the last bull market three years ago. Google Trends shows that the search volume for “Bitcoin” skyrocketed in the first half of January when the spot ETF was first listed, but then fell back to bear market levels. Moreover, the download volume of trading app used by retail investors is also much lower than during the bull market.
According to Sensor Tower data, the download volume of the Binance app reached 10 million times in the fourth quarter of last year, higher than the 9 million times in the third quarter of last year and the 8.1 million times in the fourth quarter of 2022. However, during the peak of the bull market in the second quarter of 2021, the download volume of the Binance app reached 25.8 million times.
The download volume of the Coinbase app in the fourth quarter of last year reached 1.7 million times, a growth of 13% compared to the previous quarter, but still lower than the same quarter of the previous year, and much lower than the peak download volume of 10.8 million times in the second quarter of 2021.
Owen Lau, an analyst at Oppenheimer & Co, said that from the consumer trading volume of Coinbase, it currently only reaches 16% of the retail trading volume during the last bull market peak. With the return of bankrupt entities’ capital, there is still a lot of room for capital inflow.
Many investors expect that another round of price increase will occur in the cryptocurrency market as Bitcoin is expected to undergo halving in April. Alesia Haas, CFO of Coinbase, pointed out that the company has indeed seen some positive momentum in the past. In the past, halving has led to more retail participation and trading volume growth.
Bitcoin has already risen by more than 20% so far this year. Market observers expect that if the price continues to rise, it will be difficult for individual investors to resist the attraction of the cryptocurrency market. Alyssa Choo, a cryptocurrency analyst at Bitwise, stated:
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