How Retail Investors Are Driving the Crypto Growth Story


When 2017 ended, there were thoughts built upon the financial institutes that would take over from the retail investors. Hence, transforming to become the driving factor and prime class of investors in cryptocurrencies. However, there has been a report last week from ZUBR arguing that retail investors will not just stay in this market. They are here for consuming more than half of the daily bitcoin’s supply for not more than four years.

The reporters have predicted that before the next halving phase appears in around 2024, retail can end up consuming over 50% of the supply. The data from analytics firm Chianalysis guided ZUBR to locate the accounts with whole balances that are smaller i.e. people hold 1-10 bitcoins. The sizes suggest that there is more retail than institutional, and it has rapidly grown.

At the end of 2017, as bitcoin had hit an all-time high value, the number of wallets of retail investors almost doubled. This was later recorded in an increase of 215,000 at the beginning of 2020, June. Additionally, the retail investors together hold more than 500,000 bitcoins (i.e. approximately $4.6 billion), from a record published at the beginning of 2019.

An average of 144 blocks of bitcoin is being mined regularly. Soon after the 2024 halving of bitcoins, approximately 450 bitcoins will be introduced to the circulation system on a regular basis. Considering the demand remains at its current trajectory in the coming four years. Then the number of bitcoins demanded daily by the retail investors will result in 250 every day. This according to ZURB is half of the regular supply in the next four years.

This is the report coming from the whole numbers in the wallets. Once the fractional values are considered the regular demand can be expected to be higher. The exchange accounts were not included by ZUBR, so even that is excluded.

At the beginning of this year, around 1,800 fresh bitcoins were added to the market and were circulated regularly. When the block reward decreased to 6.25 from 12.5 in sometime in May, the daily supply of bitcoins dropped to 900.

Considering that the mining level will remain the same, the regular supply could fall to 225 bitcoins by the end of this decade. Analyst in Quantum Economics, Jason Deane said that these pressures on the supply make a bearish bitcoin case. He added that bitcoin has an uninterrupted supply curve, and the maximum supply is also transparent. Hence the only reason why the coins will reduce will be due to being lost in the blockchain network.

Even though bitcoin’s entire supply is tied at 21 million, the coins lost over the years or can not be recovered henceforth amount to 1.5 million reported CoinMetrics. Whereas Unchained Capital reports that the numbers go as high as 4 million. This puts even more pressure on the supply chain.

Being said that, we can not yet deny that the real factor here is the demand. Once this becomes a trend, at some point of time it will overcome supply, increasing the prices of bitcoins. Before that starts you should secure some of your own bitcoins through Now that the demand has fallen a little it is the best time to invest and wait for the time it increases again before you sell.

When the prices increase it will be easy for people to recognise bitcoin as a truly efficient asset. This in return could cause the demand to increase therein increasing the value further and this continues till the demand is high. This can be related to the research conducted by ZUBR, that pointed out the existence of this circle. From the beginning of this year, the retail investors’ balances have increased monumentally every month. Although the volatility of the market is quite high, and the prices of bitcoin’s fell around 40% in March, yet the retail wallets have not decreased in any given month this year.

Deane further adds that this should be no surprise to the market. If one thinks that demand will keep on rising, while the daily supply starts to fall. It is only wise to believe that the retail investors are buying bulks anticipating the price hikes in the future.

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