Bitcoin Whales Continue to Accumulate, Retail Also Coming as FOMO Starts Creeping in
Retail traders are moving back into cryptocurrencies, and the number of first-time buyers is on track to eclipse what was seen in December 2017.
While Google searches for “Bitcoin” remain even lower than June 2019 levels, which was seen in February 2018 before that, searches for the term “Coinbase,” the crypto exchange has reached its highest level in at least a year, according to Google Trends.
The crypto exchange has also begun to go offline as the market makes big moves.
“FOMO is slowly kicking in. We are only just beginning to see some of our retail clients borrowing against their Bitcoin to buy more Bitcoin, and that will ultimately propel the rally well into the $20,000s and beyond,” said Antoni Trenchev, co-founder of Nexo in London, a crypto lender.
Let the Retail Come In
First-time buyers are also flooding the market, especially ever since PayPal enabled its customers to buy, hold, and sell cryptos. Square’s Cash App reported customers purchasing $1.6 billion worth of BTC in this quarter, a jump of 83% from the previous period.
On this #Bitcoin rise, our data showed behavior from various holder sizes:
🐟 0.1-1.0 $BTC holders – began selling at $13.5k
🐠 1.0-10 $BTC – began selling at $15.2k
🦈 100-1,000 $BTC – began selling at $18.0k
🐳 1,000 – 10,000 $BTC – still accumulatinghttps://t.co/6V5iB7Ueuh pic.twitter.com/VZFZPqFuYF
— Santiment (@santimentfeed) November 25, 2020
Because of this, Lennard Neo, head of research at crypto index fund provider Stack Funds, expects a deluge of retail demand even more intense than in 2017. And because of this, he sees BTC hitting $60k to $80k by the end of 2021.
“Whenever I see mainstream media attention like this, that usually leads to a sell-off,” Kevin Murcko, the founder, and CEO of CoinMetro, an Estonia-based crypto exchange, told Bloomberg. “The big fish need to lay off risk, so they open the floodgates to bring in retail guys to dump on. Not sure this is the case this time around, but it seems a bit suspect.”
Institutions Already Here
Bitcoin meanwhile continues to move off the exchanges, which make this bull market a lot different than 2017 one.
At that time, BTC held by exchanges nearly doubled as the leading digital asset flirted with $20k, which makes sense in a retail-driven rally.
Stablecoins, whose market cap has grown more than 3x in 2020, might be contributing to this change this time. Another contributing factor could also be the rise of wrapped versions of Bitcoin on Ethereum.
Besides PayPal and improved focus on self custody assets, Coinbase sees its institutional assets under control growing from 6 billion to 20 billion by 4Q20.
“The downward trend in AuC by retail exchanges may be an indication that this rally is being driven by increased institutional adoption. Given the use of OTC on-ramps, an increase in institutional participation would result in positive price action, but limited on-chain footprint, which is what we might be witnessing in this bull market,” noted Coin Metrics in its report.