Retail Bitcoin Traders Rival Wall Street Buyers as Mania Builds
(Bloomberg) -- The cryptocurrency market’s little guys are going toe-to-toe with the big banks as Bitcoin continues to surge to new highs, data compiled by JPMorgan Chase & Co. suggest.
Using Square and Paypal data as a proxy, retail investors have purchased over 187,000 Bitcoins so far this quarter, compared to roughly 205,000 last quarter, strategists including Nikolaos Panigirtzoglou wrote in a Friday report. Meanwhile, institutions have bought about 173,000 of the world’s largest cryptocurrency over that time frame -- as gathered by Bitcoin futures, fund flows and company announcements -- after buying nearly 307,000 in the last quarter of 2020.
While far from bulletproof, the stats suggest that flows into Bitcoin are becoming more balanced after institutions dominated late last year. Wall Street’s embrace of crypto was cited a key reason for Bitcoin’s run-up in 2020, with banks and asset managers alike unveiling plans in the space. Now, with the Reddit-fueled meme stock craze cooling and novelties such as digital artwork setting records, retail traders -- some now armed with $1,400 stimulus checks -- are taking control.
“For many retail cryptocurrency traders, Bitcoin was the bread-and-butter trade of the pandemic. Meme stock trading volatility burnt many, but Bitcoin has maintained an amazingly bullish trend that has made most winners,” said Ed Moya, senior market analyst at Oanda Corp. “Retail traders got reinvigorated with the latest NFT buzz and as the stimulus checks hit their bank accounts.”
Bitcoin climbed above $60,000 for the first time this weekend after President Joe Biden signed the $1.9 trillion pandemic-relief bill into law, but dropped below that mark Monday morning. The world’s largest cryptocurrency has surged roughly 990% over the past year.
Those staggering gains can become self-fulfilling as individuals on the sidelines want to get in on the action, according to Brian Vendig, president of MJP Wealth Advisors.
“When institutions started to get more into the space, that shows market leadership and helps to show validation for something and then individual investors also want to participate,” Vendig said. “As you see something taking off, that creates an impulse where you want to participate -- that balancing act tilting more to the greed side or the fear of missing out, I’m sure that’s a component to it as well.”
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