How retail investors are taking over the crypto market

by Arthur · October 8, 2022

By Edul Patel

Investing is a long-term plan, whether in stocks, shares or crypto, especially in times of high market volatility. Crypto is relatively a newer asset class, and therefore it is more exposed to macroeconomic changes in the short term. Therefore, long-term investment is a sensible strategy chosen by traders to build wealth in crypto.

Retail investors started moving towards cryptocurrency investing a couple of years back. The crypto market has been the target of traders until 2016 to make money. But 2017 has been crucial as many retail investors entered the market and drove the bull. The move also brought Bitcoin into the mainstream, resulting in price volatility. Traders also played a crucial role in 2021’s bull run. Earlier, this space was mainly dominated by a few large private institutions and high net worth individuals or HNIs.

The paradigm shift from traders to retailers was aided by two important factors. The first was the unfortunate COVID-19 pandemic which caused massive problems for the traditional asset classes and drew people to explore the possibility of crypto as an asset class. The other factor was the $2 trillion in aid, also known as quantitative easing, from the US Federal Reserve to US households. A massive portion of this aid found its way into the cryptocurrency ecosystem. It caused a huge increase in awareness of the popularity of crypto and web3 among retail investors. Today’s traders have begun to see the potential of cryptocurrencies in this digital era to achieve financial freedom.

Since some developed countries like the US and the UK have already started looking towards cryptoassets as a viable alternative to fiat money, everyday investors are optimistic that even developing countries will soon adopt crypto. The pace at which cryptoassets are becoming mainstream points to a progressive future for this asset class.

While talking about India, it is a country where people like to save more and spend less as they are more worried about the future in case of uncertainty. In 2008, when most of the world was going through an economic crisis, India was one of the countries that not only showed greater resilience, but also recovered faster. India’s conservative approach to finance and savings played an important role in navigating through the financial crisis. This economic crisis showed the resilience of the Indian economy.

According to the CFA Institute Investor Trust study, Indian retail investors rank highest for their trust in cryptocurrencies. Increasing retail investor awareness will increase confidence in the sector and is the only way to grow the industry. The Supreme Court’s decision to lift a ban on digital tokens from 2018 has also created interest around the crypto.

With increasingly user-friendly exchange platforms, crypto investors now have no shortage of choices to invest in. One of the main attractions for most investors is the chance to make money by investing in small amounts. Governance tokens have also inspired investors for their prospect of shaping the market through their voting rights on how a blockchain ecosystem works.

The crypto market attracts different types of investors with different intentions. One of the primary types of investors in the market are retailers. This type of investor invests in cryptocurrencies for personal interests. Most retail investors in crypto are driven for their benefit or life events such as retirement plans, asset purchases or savings.