Why are Retail Investors Are The Most Important For The Bitcoin And Crypto Asset Space?
Why Are Retail Investors Important For The Crypto Space?
Retail investors are the group that is mostly responsible for getting cryptocurrencies to where they are today. Cryptos only truly blew up after retailers started investing. Considering how serious cryptos became, legal concerns and other issues followed, and it is because of these issues that the crypto space started turning towards institutional investors.
This is especially clear when it comes to ICOs, which became popular in the second half of 2017. Anyone who wanted to participate in an ICO was free to do so. Now, however, they are often limited, and only accredited investors may join them. Before, ICOs even had a private and public sale, with the private one going first. Now, most of the new ones do not include the public at all. If retailers wish to purchase a coin, they have to wait until it gets listed on some exchange.
Exchanges are making an effort to make themselves useful to institutions as well, with new trading options especially designed so that institutions would be attracted to them. Despite the fact that there are less new crypto-based hedge funds these days, investment companies and trading managers are still targeting them. Finally, AML and KYC requirements have become a new norm, which often locks out low-income investors from developing countries.
In short, the entire crypto world is turning away from retailers, and towards institutional investors. In return, retailers started turning away from cryptocurrencies, especially in 2018. This is also clear due to the fact that they are not even trying to make an effort in overcoming some technical difficulties in order to start working with crypto. This has inspired many crypto-based firms to start projects that would bring retailers back. As a result, cryptocurrencies have never been more easily accessible.
User-friendly platforms and educational content is easy to reach at any time, just waiting for interested parties to join.
Why Does The Crypto World Need Retail Investors?
One thing that the industry tends to forget is the importance of an individual. Individual's importance in cryptocurrency investing is nothing less than crucial. They are the ones that have brought cryptocurrencies to where they are now, and they can also bring it down. Some of these retail investors, those with large amounts of crypto in their possession, are called whales.
Whales are directly responsible for providing market liquidity, but also triggering bull runs and crashes.
However, even retail investors' influence is limited, and they cannot make the market larger without institutions, because institutions are where the money is. Numerous experts have predicted that institutional investors will be the ones that will bring mass crypto adoption after they join.
However, retailers are still a crucial part of crypto, and despite the fact that the markets are down, there are many initiatives to spark a new wave of interest into crypto among them.
The Future Of Crypto Investors
According to experts, cryptocurrencies need retail investors, and their best bet is the unbanked, the underbanked, and millennials. These are, generally, people that do not have access to investment opportunities. Because of that, there is a high probability that they would be open to going crypto. Cryptocurrencies are a new opportunity for these people, one that they are usually not willing to let slip away.
Another group that might join includes “non-accredited investors.” These are investors that were only able to join the post-IPO stocks for investing, which has severely limited them.
Finally, there are millennials, whose interest should remain due to the fact that it fits with their financial pattern, in general. They were also among the most bullish crypto investors, and believe that cryptocurrencies will become just as widely accepted in the near future as any fiat currency is today. Because of this, millennials are often targeted as customers by companies, which are, once again, forgetting about retail investors.
What Are Retail Investors Looking For?
Retail investors are looking for simplicity and user-friendliness. Coinbase has recognized this and was among the first to offer ‘fiat onramp'. However, as the crypto market matures and progresses, it becomes more complex as a result. This is why companies are trying another approach, and are attracting retailers with education.
And that is pretty much it. Education and ease-of-access are what experts say is most needed currently. Platforms should be available, easy to navigate and use, and they should offer a decent customer support. While this seems simple, most platforms are just arriving at this conclusion, and are only starting to make necessary changes. Some speculate that doing so prior to the crypto growth in 2017 might have made a big difference, but that is something that we will never know. All that remains is to try and make these changes now when the markets are down.