Is the Cryptocurrency Market in a Bull Market? Are Retail Investors Back? Analysts Answer

Small investors appear to be gradually re-entering the crypto market, although not at the same pace as the last bull market three years ago.

Coinbase, the largest U.S. cryptocurrency exchange, reported a 60% year-over-year increase in net consumer transaction revenue in the fourth quarter and an 80% increase compared to the third quarter, according to a shareholder notice published Thursday.

Kyle Doane, a trader at Arca, said there are signs that the retail investor base is returning to the market, although not to the extent of the last bull market. He noted that even crypto stocks like Coinbase and mining company shares fluctuate more than many tokens.

Retail investors, who accounted for a significant portion of revenues at Coinbase during the recent bull rally, are also a major source of revenue for most other crypto exchanges.

However, web searches for the word “Bitcoin” rose in the first half of January but then fell back to bear market levels, indicating that retail investors have not yet fully returned to the market. Similarly, downloads of the largest cryptocurrency exchange applications heavily used by individual traders are also well below bull market levels.

Oppenheimer & Co. Looking at Coinbase’s consumer transaction volume, “we’re only at 16% of the last peak retail investor volume,” analyst Owen Lau noted. He added that with money returning from bankrupt institutions, “there’s a lot of room to potentially go up.”

Some consumers had their money trapped in a group of companies that went bankrupt, including crypto exchange FTX, slowing their return to the market.

*This is not investment advice.