Crypto Rebound: Everyday Investors Return to Cryptocurrency Market with Caution
Everyday investors are returning to cryptocurrency, though with less enthusiasm than before. According to a report, the largest American crypto exchange saw a 60% year-over-year jump in consumer transaction revenue during its most recent quarter, and an 80% increase from quarter to quarter. Additionally, a platform focused on retail users saw crypto notional volumes jump by 242% in December from a year ago.
The report suggests that "mom-and-pop" crypto enthusiasts, who lost billions when the market plummeted in 2022, could be returning to the space following the launch of U.S. exchange-traded funds investing directly in Bitcoin. Bitcoin’s price has more than doubled in the last year, raising considerations about the volatility of crypto. "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," said a trader. "Even crypto stocks and miners are exhibiting more volatility than many tokens."
For the 2023 fiscal year, a major crypto company's transaction revenue was $1.5 billion, down 36% year over year, and total trading volume was $468 billion, down 44% from the previous year. Consumer trading volume for the full year was $75 billion, down 55% YoY, and institutional trading volume was $393 billion, down 41% YoY. The declines were attributed to "multi-year lows in crypto asset volatility."
However, the fourth quarter showed a more positive story for the crypto ecosystem, with consumer transaction revenue at $493 million, a 79% increase quarter over quarter, and consumer trading volume at $29 billion, up 164% from the previous quarter. This surpassed the growth of the U.S. spot market, which rose 90% over the same period. "Most customers on our platform own multiple crypto assets, not just bitcoin," said the CFO of the leading crypto exchange.
Analyst comment
Positive news: Everyday investors are returning to cryptocurrency with less enthusiasm than before. The largest American crypto exchange experienced a significant jump in consumer transaction revenue and a platform focused on retail users saw a substantial increase in crypto notional volumes. The launch of U.S. exchange-traded funds investing in Bitcoin and Bitcoin’s price doubling in the last year are driving this return.
Analyst prediction: The market is expected to continue its growth as more retail investors re-enter the cryptocurrency space, although at a slower pace compared to the previous bull market. The increased interest in crypto assets, coupled with the launch of investment products and rising Bitcoin prices, indicates positive momentum for the market in the near future.
