Key Points:
- Bitcoin has risen near its all-time highs, yet retail investor activity remains low.
- Coinbase app downloads, a key retail activity indicator, have plummeted from past rankings.
- Short-term holders (STH) of Bitcoin are at lower levels, typically associated with bear markets.
- Ethereum’s NFT-related gas usage has significantly declined from its 2021 peak.
- Retail transaction volume is half of what it was earlier in 2024.
- Meme coins show contrasting trends with massive growth in 2024, driven by retail investors.
Retail Investors Remain Absent Despite Bitcoin Price Surge
Bitcoin’s recent price surge has pushed it to within 15% of its all-time highs, but the crucial role of retail investors remains minimal. Historically, when Bitcoin or other cryptocurrencies experience significant gains, retail investors flock to the market, often signaling the peak of a bull run. However, data shows that this pattern may not be repeating itself.
A prime indicator of retail investor participation is the popularity of the Coinbase app, which serves as a major entry point for retail users into the crypto market. During the bull runs of 2017 and 2021, Coinbase ranked number one in app store downloads, reflecting high levels of retail interest. As of October 2024, the app has plummeted to the 438th spot in the download rankings, signaling that retail participation remains limited. This is particularly striking as the app ranked 5th during Bitcoin’s price peak in March 2024.
Short-Term Bitcoin Holders Indicate Bearish Sentiment
One of the main metrics used to gauge retail participation is the activity of short-term holders (STH). These investors, who have purchased Bitcoin in the past 155 days, typically chase price movements and tend to increase their holdings when markets start rising. Historically, the peaks of Bitcoin price movements have correlated with large increases in STH holdings.
However, the current market shows a different trend. Despite Bitcoin’s recent rise, the total amount held by short-term holders remains around 2.5 million BTC, a level typically associated with bearish markets. This lower STH activity indicates that the recent price increase has not yet drawn significant retail attention, suggesting that we may not yet be approaching a market peak.
Decline in Retail Bitcoin Transactions
Another measure of retail participation is the volume of Bitcoin transactions made by smaller investors. Transactions under $100,000 are typically associated with individual retail investors, while larger transactions are generally attributed to institutional players. During past bull runs, retail transaction volumes surged as prices peaked.
In 2024, retail transaction volumes have been subdued. Current levels are only half of what they were at the market’s peak earlier this year. Analysis from Glassnode, a blockchain data provider, shows that transaction fees, another indicator of network activity, are at cyclical lows, generating only $500,000 per day. This lack of transaction volume and fee generation further underscores the limited participation from everyday investors.
Ethereum and NFTs: A Shrinking Market Segment
Ethereum, another major player in the crypto ecosystem, has also experienced a significant decline in retail interest. In 2021, during the height of the NFT craze, Ethereum’s gas usage from NFT transactions made up about 40% of total network activity. At that time, the market was flooded with speculation, driving up both prices and transaction fees.
Today, that landscape looks vastly different. According to data from Glassnode, NFT-related gas usage on the Ethereum network has dropped to just 2%, reflecting the sharp decline in speculative activity. Retail investors, who were once driving up gas fees with every NFT purchase, seem to have lost interest in this market segment.
Meme Coins: An Outlier in Retail Activity
While retail activity in Bitcoin and Ethereum has dwindled, meme coins present a contrasting picture. These tokens, which are primarily driven by retail investors, have seen explosive growth throughout 2024. According to X user @MustStopMurad, meme coins have surged by 2,040% since the start of the year, far outpacing the gains seen in more established cryptocurrencies like Bitcoin.
At the Token2049 event in Singapore, meme coins were highlighted as a major growth area, with retail investors driving much of this activity. Despite broader market hesitance, meme coins have captured the speculative interest of smaller investors, highlighting the divergent trends within the cryptocurrency market.
A Market Divided
In summary, while Bitcoin’s price continues to rise, retail investor participation remains weak, contrasting sharply with previous bull markets. Coinbase app rankings, short-term holder data, and transaction volume all point to a lack of retail enthusiasm. Meanwhile, NFT-related activity on Ethereum has also collapsed, and only meme coins are showing signs of vibrant retail participation. The absence of a strong retail presence could suggest that the current price surge may not yet be a signal of an impending market peak. However, the growing interest in meme coins reveals that retail investors are still active in niche areas of the market, indicating a divided crypto landscape.
