With the boost of the Bitcoin spot ETF, the currency 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 currency market, but they have not fully participated yet. Analysts believe that there is still a large influx of retail funds to come.
The financial reports released by the US-listed cryptocurrency exchange Coinbase last week showed that its consumer net trading revenue increased by 60% year-on-year and 80% quarter-on-quarter in the fourth quarter of last year. The financial report of online brokerage Robinhood also showed that the nominal trading volume of cryptocurrencies in December last year increased by as much as 242% compared to the same period last year.
According to Bloomberg, these latest signs indicate that retail investors, who lost billions of dollars in the currency market crash in 2022, have started to return to the market. Retail investors are extremely important to the currency market. During the last bull market, retail investors accounted for the largest share of Coinbase’s revenue and were also the main revenue driver for most other cryptocurrency exchanges.
It is worth noting that retail investors have not fully entered the market like they did during the last bull market three years ago. Google Trends shows that the search volume for “Bitcoin” soared in the first half of January when the spot ETF was first listed, but then fell back to bear market levels. In addition, the download volume of the trading platform apps used by retail investors is much lower than during the bull market.
Sensor Tower data shows that 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 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 Binance 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 far below the peak of 10.8 million times in the second quarter of 2021.
There is still a large influx of retail funds to come.
Owen Lau, an analyst at Oppenheimer & Co, said that based on the consumer trading volume of Coinbase, it currently only accounts for 16% of the retail trading volume during the last bull market peak. With the return of bankrupt entities’ funds, there is still a large influx of funds to come.
Many investors expect that another round of price increase will occur in the currency 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, halving has led to more retail participation and trading volume growth.
Bitcoin has 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 currency market, according to Alyssa Choo, an analyst at Bitwise cryptocurrency.