Has bitcoin become too expensive for retail investors?
Gone are the days when you could grab a decent chunk of bitcoin with just a few hundred bucks.
Institutions are now coming in with billions, making it difficult for retail investors to get a piece of the action.
Bitcoin, which started 2024 at $42,000, hit an all-time high of $73,000 on 13 March. Investors are now paying 1,360% more than they were in March 2020, when it was trading around $5,000.
“Previous bitcoin rallies were driven by retail investors. During the bull run of 2021, taxi drivers and gym trainers were asking about bitcoin, but not anymore,” said David Mercer, chief executive of LMAX Group. “The space is becoming a bit too expensive for them to participate.”
“Another reason behind retail participants not asking about bitcoin anymore is that they were burnt really hard during the recent crypto winter,” he added.
While retail participation in crypto has dropped since the approval of spot bitcoin ETFs in the US, institutions have started accumulating bitcoin at a rapid pace.
Michael Saylor’s business intelligence firm MicroStrategy purchased more than 21,000 bitcoin in March. The publicly-listed firm now holds 214,246 bitcoin, roughly 1% of the total supply.
BlackRock’s iShares Bitcoin trust now holds 270,000 bitcoin.
“The latest rally in bitcoin is driven by the simple concept of supply and demand. There is massive institutional demand but limited supply,” Mercer said. “If you are an institution in crypto and still doing bad, you are in the wrong market.”
Crypto bros get a makeover
Speaking of institutional participation, the one thing that has changed significantly in the crypto world after the entrance of large organisations is its culture. The crypto sector was known for its wild parties and poorly organised corporate events. Bros like Sam Bankman-Fried used to arrive in shabby shorts. However, things have now changed for the better, according to industry leaders.
“The crypto sector continues to mature, it feels more grown up than it was in the past,” said Usman Ahmad, CEO of Standard Chartered-backed crypto firm Zodia Markets.
“In recent years, institutions have, in certain cases, been wary of publicly engaging in the sector. However, with the positive sentiment surrounding the bitcoin ETF approvals by major financial institutions in January, and perhaps also influenced by the industry being cleaned up through public lawsuits and sentencings, crypto is developing a more respected position,” he added.
Komainu’s new boss
Nomura’s crypto custody firm Komainu has appointed Corinthian Digital Asset Management’s chief executive Paul Frost-Smith as its co-CEO. The decision comes some two months after previous CEO Nicolas Bertrand stepped down, citing personal reasons. Frost-Smith, who will assume the role on 1 May, will share the responsibilities with Robert Johnson, who was appointed as the crypto firm’s interim CEO in February after Bertrand’s departure.
“It’s a great, small entrepreneurial team. I have already met a lot of people from the team and I believe that we have everything to play for,” Frost-Smith said.
In other news
Move aside, big banks: Giant funds now rule Wall Street
BNP Paribas: No big London IPOs until 2025
Ken Griffin’s hedge fund Citadel to move to new London development
Recommended reading
Is Generative AI built on theft? (The Economist)
Disgraced ‘crypto bro’ SBF to turn on celebrities Tom Brady and Larry David (The Independent)
Fintech finally starts to add up for investors (Financial Times)
