FOMO Yet To Ignite As Retail Demand Hits Record Lows

Recently, the cryptocurrency market has been on fire with intense price action and speculative activity. Amidst all this, Changpeng Zhao (CZ), the CEO of Binance, made an intriguing statement about investor sentiment.

CZ also alluded to the much-discussed ‘fear of missing out’ (FOMO). He said that the crypto market is still early in the latest craze, and analysts seem to side with him.

However, a closer look at retail investor data shows a different world. Retail participation is currently at historic lows, which could mean FOMO has not yet struck the retail market.

Changpeng Zhao’s talk comes as Bitcoin swings around key psychological levels and makes massive gains in select alts.

However, the retail crowd through which some demos would accrue tremendous wealth in a later bull market phase is not yet involved.

The disconnect between price action and retail activity has led to questions regarding whether the current rally is sustainable and when the so-called FOMO will arrive.

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Retail Demand Plunges to Historic Lows

One of the most remarkable developments in the current market environment is the decline in retail investor interest.

As the chart above shows, the 30-day retail demand change, a measure of transaction volume tied to the smaller investor (investor transacting $0 – $10,000 worth of Bitcoin), declined to -22%, an all-time low.

Retail engagement for this market is the lowest ever recorded and starkly contrasts what we’ve seen in previous bull market cycles, with a ballooning retail population attending price increases.

Retail investors have always been late adopters of market trends. Generally, these guys come in at the most exuberant of times, typically after a large price rise.

This brings home the FOMO concept of smaller investors catching up on perceived opportunities before prices peak.

But in this cycle, retail investors are being careful for now. They are unshaken by the rise of Bitcoin and the rest of the market rebounding.

It’s notable hesitation, given the current price action of Bitcoin, which is trading near Bitcoin’s all-time highs.

Retail investors seem unsure but wait for proof of a long-lasting bull run, whereas institutional investors and whales seem to push the market out.

Market Sentiment Signals Greed, But Not Euphoria

Retail demand is still subdued, but there’s broad market optimism.

On a scale that measures market emotions via a combination of volatility, trading volume, and social media activity, the Fear and Greed Index is 58, showing a neutral market state.

It is again a market forced to manage itself with moderate greed, conducive to a cautiously optimistic market.

Although interest from investors in Bitcoin and other cryptocurrencies has sparked a rally, the fact that the bug hasn’t bitten most investors means that we’re not necessarily cruising in the euphoric area yet.

Changpeng Zhao’s comments about the early stages of FOMO seem to reiterate that in terms of growth, there’s still a little way to go before retail investors shake up the market.

One big question now is, what will spark retail investor interest again? Historically, historical price increases have been the driving factor for retail re-entry into the market.

The common refrain for smaller investors is that when prices reach new highs or are on a parabolic growth curve, they will jump in, fearing that they will miss the train.

Such behavior can create self-reinforcing cycles, seeing higher demand raise prices and attract more participants. That dynamic could play out again, as Bitcoin’s recent moves suggest.