Retail Traders Fuel February Crypto Rally, JPMorgan Analysis Shows

According to a recent report from JPMorgan, it has come to light that retail traders played a pivotal role in driving the surge witnessed in the cryptocurrency market throughout February.

Retail Resurgence: Small-Scale Investors Propel Crypto Market Rally

The analysis conducted by JPMorgan’s research team, led by Managing Director Nikolaos Panigirtzoglou, revealed that the resurgence of “small-scale investors,” often referred to as ‘mom-and-pop’ traders, has been instrumental in propelling popular cryptocurrencies such as Bitcoin to two-year peak this month.

This resurgence follows the market decline experienced in January, indicating renewed optimism among retail participants in the crypto space. The JPMorgan team noted:

We find that the retail impulse into crypto rebounded in February, thus likely responsible for this month’s strong crypto market rally.

The report further underscores the significant surpassing of on-chain Bitcoin flows from “small wallets” compared to those from “institutional investors.”

Particularly noteworthy is the observation that inflows into US spot Bitcoin exchange-traded funds (ETFs) have contributed to this surge, as retail investors increasingly allocate funds to these newly available investment vehicles.

Despite this influx, the report emphasizes that the dominance of retail traders in driving the market rally remains evident, even after accounting for these inflows into Bitcoin spot ETFs.

Critical Catalysts And Concerns

JPMorgan’s analysis also highlights three critical catalysts for this retail-driven rally. These include the upcoming Bitcoin halving event scheduled for April, the imminent Ethereum network upgrade, and the potential approval of spot Ethereum exchange-traded funds (ETFs) slated for May.

While the JPMorgan report suggests that the first two catalysts are “largely priced in,” it also indicates a moderate 50% chance of approval for spot Ethereum ETFs, highlighting the cautious optimism surrounding regulatory decisions.

Meanwhile, concerns have been raised regarding the accessibility of Bitcoin to retail investors in the foreseeable future.

Oliver Velez, a crypto analyst and trader, has recently warned that as Wall Street increasingly embraces Bitcoin, prices could surge to levels that may render it unattainable for ordinary investors, drawing parallels to the prohibitive costs of Berkshire Hathaway shares.

Berkshire Hathaway (BRK.A) is trading at $554,300 a share. Its price is out of the reach of 99% of all human beings on Earth. You see, Warren Buffett never wanted his baby accessible to you, the masses. It was only for the elite, only for the priveledge, only for those closest to… pic.twitter.com/s9ikElnjee

— Oliver L. Velez 13%’er Bitcoiner (@olvelez007) January 8, 2024

This sentiment aligns with ambitious price predictions for Bitcoin, with figures ranging from $100,000 to $500,000 being touted by industry experts such as Blockstream CEO Adam Back and analyst Michael Van De Poppe.

That’s what I’ve been saying, my bet is $100k befofe the halving.

— Adam Back (@adam3us) December 2, 2023

Featured image from iStock, Chart from TradingView