Digital Assets: Retail Investors A Force To Reckon With In Cryptos (JP Morgan)

March 17, 2021 | Digital Assets, News
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Latest quarterly numbers show retail investors stole a march on institutions.

Figures from JPMorgan Chase, cited by Bloomberg, show that retail investors invested in 187,426 bitcoins in the current quarter up to Friday, whereas institutions bought up 172,684 of the leading cryptocurrency.

JPM used data from Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) to arrive at the retail statistic. Fund flows, corporate announcements, and futures data constituted the basis for the estimation of institutional investments.

JPMorgan Chase Stats: Are retail investors taking over the rally?

Institutions have hogged most of the credit from the crypto media for bitcoin’s sharp rally over the past year, and particularly the last quarter of 2020. This is also borne out by JPMorgan Chase figures – Institutional purchases of 306,658 bitcoin versus 205,444 by retail investors during Q4 2020.

But small investors may be looking to change that, especially now that they are armed with stimulus checks.

Bloomberg cited an interesting take on this phenomenon by Ed Moya, senior market analyst at Oanda Corp.: “For many retail cryptocurrency traders, bitcoin was the bread-and-butter trade of the pandemic…[Bitcoin] maintained an amazingly bullish trend that has made most winners…Retail traders got reinvigorated with the latest NFT buzz and as the stimulus checks hit their bank accounts.”

Recent surveys by Mizuho Securities and Deutsche Bank both show that investors are planning to plow portions of their stimulus payments into bitcoin, or stocks, or both.

Will history repeat?

If institutions are dialing down on bitcoin, that doesn’t augur well for the bitcoin rally, however well-entrenched it may be.

According to Brian Vendig, president of MJP Wealth Advisors, institutional investments are a validation of bitcoin, and their leadership may also have sparked a fear-of-missing-out (FOMO) spurt in buying by small investors.

But recall that the 2017 rally in bitcoin owed mostly to exuberant buying by the retail side, with institutions generally sitting out the party.

And we all know how that rally ended.

Related Story:  Stimulus Checks Could End Up Chasing Bitcoin And Stocks (Mizuho)

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