Bitcoin Hits Record High in 2023, But Why Aren’t Everyday Investors Jumping into This Bitcoin Bonanza?
Bitcoin, the digital gold of our times, just hit its highest value in 2023. But guess what? The regular Joe and Jane, our everyday investors, aren’t rushing to buy. Let’s find out why.
Picture this: the entire cryptocurrency market’s worth zips past a whopping $1.55 trillion. Bitcoin and Ether, the big shots in crypto, shoot up by 14.5% BTC $44,005 and 11% ETH $2,264 respectively. Bitcoin even outshines giants like Meta in value. Pretty impressive, right?
Retail investors aren't paying attention to #bitcoin.
— Rajat Soni, CFA (@rajatsonifnance) December 2, 2023
They are more worried about whether or not they will be able to pay rent or put food on the table.
They will likely start paying attention near the next top (IMO sometime in 2025) and they will FOMO into a position before…
But here’s the twist. While Bitcoin’s climbing the charts, the interest from the average investor isn’t really catching up. Why, you ask? Experts suggest a couple of reasons: the lingering impact of inflation and less enthusiasm for borrowing money, especially with interest rates hovering above 5.25%. Although some might say this is being blown out of proportion, the core idea remains.
In the U.S., signs of economic strength are everywhere. Wages, salaries, and household wealth are hitting record highs. Analyst Ed Yardeni thinks we might have already seen the best of this year’s market growth earlier, pointing to the S&P 500’s 8.9% rise in November. This increase hints at easing inflation and strong job numbers. Yet, investors are playing it safe, sitting on about $6 trillion, ready but not yet invested.
So, did our regular investors miss out on Bitcoin and Ether’s recent success? It’s hard to tell. We don’t have a magic tool to track every move in the crypto world. A key measure to watch is the Tether premium in China, which reflects the difference between peer-to-peer USDT trades in yuan and the U.S. dollar’s value. On December 5th, this premium was at 1%, a slight uptick but still in the neutral zone. It hasn’t crossed 2% in over six months. This is important because Chinese investors often use this method to get into digital currencies.
Looking at Google Trends, searches like “buy Bitcoin” have been stable, not spiking, despite Bitcoin’s 53% rise in the last 50 days. This trend seems odd, especially considering that the search levels are 90% lower than their peak in 2021.
Another angle to consider is the derivatives market, particularly perpetual futures, popular among retail traders. These contracts have a built-in rate that changes every eight hours. Lately, the demand for buying (long positions) is slightly higher than for selling (short positions), but not by much. During really bullish times, this demand can skyrocket, but that’s not what we’re seeing for the top cryptocurrencies right now.
To wrap it up, while the overall retail participation in this crypto surge isn’t clear, it seems like regular traders are cautious, possibly due to regulatory concerns around platforms like Binance. This means some traders might be shifting to other exchanges like Coinbase, rather than a new crowd diving into crypto.
In conclusion, while Bitcoin is having its moment in the spotlight, it looks like most regular investors are watching from the sidelines, maybe waiting for the right time to step into the crypto world.
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