Bitcoin’s recent surge has been notable for a surprising absence: retail investors. Data from consumer platforms like PayPal and Coinbase, along with research from CryptoQuant, confirms muted retail activity in the cryptocurrency market. Instead, whales and institutional investors are driving Bitcoin’s momentum, now accounting for a larger share of the market. This shift is evident in the significant inflows into spot Bitcoin ETFs in the US, with large investors responsible for two-thirds of the $24 billion invested since inception.
Several factors contribute to this retail absence:
- Historically Late to the Party: Retail investors typically enter the crypto market later in the boom/bust cycle. Noelle Acheson, in her newsletter “Crypto is Macro Now,” suggests that their current absence indicates the cycle is still in its early stages. Despite Bitcoin nearing its all-time high, retail interest, measured by metrics like internet searches and app downloads, remains low. Acheson notes that widespread retail involvement typically signals peak hype.
- Distracted by Memecoins: While largely absent from the Bitcoin rally, retail traders are active in the memecoin market, which has exploded to a $61 billion market cap this year. Retail memecoin trading volume has increased fivefold year-over-year, fueled by the ease of creating new tokens using automated generators like pump.fun. This has led to a speculative frenzy, even spawning niche sectors like AI-themed memecoin cults.
- Altcoin Challenges and Decoupling from Bitcoin: While institutional investors have driven Bitcoin’s rise, altcoins, typically dominated by retail, haven’t seen the same institutional interest due to regulatory uncertainty. Retail investors in altcoins have been impacted by large token unlocks and concentrated liquidity, according to Kaiko. Furthermore, the correlation between Bitcoin and the broader altcoin market has weakened. Except for a few exceptions like Solana, Dogecoin, BNB, and Tron, most altcoins haven’t mirrored Bitcoin’s gains. This has benefited memecoins, which now represent almost one-third of the top 50 altcoins, compared to just 7% last year.
