Bitcoin's Price is Soaring, But Why Aren't Regular Folks Buying?
What's up with the regular folks who used to drive bitcoin's biggest price surges? Well, a major U.S. crypto exchange called Coinbase revealed that people trading there only totaled about $56 billion in the first three months of 2024, when bitcoin soared to nearly $74,000.
Though it's a bit of a comeback in interest from regular people - almost double what it was at the end of last year - it's still way less compared to the average of about $133.75 billion per quarter during the last time bitcoin had a similar big jump in 2021.
In 2021, everyday investors played a big role in the crazy ride of bitcoin. Lockdowns due to COVID, easy access to money, and personal savings pumped up prices of "meme" stocks, and many felt FOMO, or fear of missing out. But this time, the latest surge was more serious and driven by big institutions getting into bitcoin through U.S. exchange-traded funds.
Now, the big question in the crypto world is when will regular traders come back? Some small investors are still feeling the effects of the crypto "winter" that lasted over two years, when bitcoin stayed low between $20,000 to $30,000.
Billions of dollars from customers got stuck when some big crypto companies went bust, like Three Arrows Capital, Celsius Network, and FTX. The founder of FTX, Sam Bankman-Fried, even got a 25-year prison sentence for fraud.
Lessons learned from the tough year 2022 are making people more cautious. Many are now thinking more about what's safe to invest in, instead of just chasing whatever's hot at the moment.
But will the speculative traders come back to the market in full force? That's still unclear. Right now, bitcoin's drop to $62,809, 15% lower than its high in mid-March, is a reminder of how risky crypto can be.
Some say bitcoin needs to hit $100,000 for regular folks to get excited again. Whether that's true or not, we do need to reach a number that really sparks that FOMO feeling again.
