Retail Investors Dip Their Toes Back Into Crypto, But Bull Run Excitement Wanes (CORRECTED)

Editor's note: This story has been updated to correct an attribution to the founder of the Telegram Channel "Make Money With Matt."

In the wake of a tumultuous year for cryptocurrencies, small investors are cautiously making their way back into the market, albeit not with the same fervor as seen in the previous bull market three years ago.

Reports from major U.S. crypto exchanges reveal a significant uptick in activity, Bloomberg reported.

Coinbase Global Inc. COIN saw a 60% increase in net consumer transaction revenue in the fourth quarter compared to the same period last year, with an 80% rise from the third quarter.

Robinhood Markets Inc. HOOD, known for its retail user base, reported a 242% increase in crypto notional volumes this December compared to last year.

This resurgence of interest among mom-and-pop traders, who faced substantial losses during the crypto price crash in 2022, seems to be fueled by the excitement around the January launch of U.S. exchange-traded funds (ETFs) that invest directly in Bitcoin BTC/USD.

The allure of significant gains, despite the notorious volatility of cryptocurrencies, appears to be drawing consumers back.

Kyle Doane, a trader at Arca, noted, “There are signs that the retail audience is starting to get back into the market, but not nearly to the extent of the last bull market, yet.”

Retail traders play a pivotal role in the crypto ecosystem, having been a major source of revenue for platforms like Coinbase during the last Indicators such as web searches for "Bitcoin" and app downloads for major crypto exchanges suggest that while interest is growing, it hasn't yet reached the heights of the bull market frenzy.

For instance, Binance BNB/USD and Coinbase have seen increases in app downloads, but these numbers still fall short of their peak in 2021.

Retail traders themselves provide insight into the changing dynamics of the market.

Matt, the founder of the Telegram channel Make Money With Matt, told Benzinga his attraction to crypto was born out of curiosity and a belief in its long-term growth, despite its volatility.

Also Read: Bitcoin's Upside Capped At $54,000-$58,000: Michaël van de Poppe Anticipates Altcoin Rotation

He emphasized the importance of risk management, adhering to the golden rule of investing only what one can afford to lose.

"The volatile nature of crypto doesn't worry me as I'm bullish on it long-term and am confident it'll continue to climb up in the long run," he said.

"To manage risk I just follow the #1 rule of investing — don't invest money you can't afford to lose. If it's money you can't afford to lose, then it doesn't matter if you don't get it back," he added.

Juzer Rangwala, a chartered accountant and crypto enthusiast, elaborated on the factors contributing to the renewed interest among retail investors.

"The introduction of Bitcoin ETFs, increased media coverage, greater accessibility, educational resources, the decentralized nature of cryptocurrencies, potential high returns and mainstream acceptance are all drawing more individuals towards crypto investment," Rangwala said.

He added that these elements combined offer a compelling narrative that cryptocurrencies are not just speculative assets but have the potential for broader financial inclusion and innovation.

Despite this cautious optimism, the market's volatility remains a significant consideration for investors.

The lessons from the past downturn have not been forgotten, prompting a more measured approach to crypto investments.

As the market continues to evolve, the blend of cautious re-entry by retail investors and the structural developments within the cryptocurrency space suggest a maturing market that could offer new opportunities for those willing to navigate its complexities.

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