Bitcoin (BTC) Edges Closer to Record Highs of $71,000 – (New York) Retail Traders Sit on the Sidelines

Bitcoin is edging closer to its record high, hovering near $71,000, yet this rally is overshadowed by a notable absence of retail traders.

Bitcoin is nearing its record high, trading close to $71,000, but this rally is notably lacking in retail participation.

Coinbase reported that a decline in retail trading contributed to lower-than-expected revenue for Q3.

“This year in particular, there was a lot of negative sentiment which likely deterred traders,” said Adam Morgan McCarthy, an analyst at data firm Kaiko.

The exchange warned that the volatility in crypto prices during October could pose further challenges in the upcoming quarter.

Despite Bitcoin’s ascent, Coinbase now expects Q4 revenue from its subscription and services unit to be in the range of $505 million to $580 million, a 7% decline from Q3. This projection is influenced by a 10% decline in Ethereum prices compared to the Q3 average, and lower interest rates.

The muted retail participation is evident, as many investors remain hesitant to engage in crypto trading. Coinbase’s forecast, coupled with missed earnings targets, led to a 9% drop in its shares on Thursday.

The crypto landscape has seen a significant influx of larger institutional investors, which has resulted in a 40% reduction in Bitcoin’s volatility from 2020 to September, according to data from Volmex.

Morgan McCarthy pointed out that recent major selling events, including actions from the German government and bankrupt firms such as Mt. Gox, have compounded the prevailing pessimism.

It’s not just Coinbase feeling the impact. PayPal reported an almost 11% decrease in the amount of cryptocurrency it holds on behalf of customers from Q2 to Q3, despite Bitcoin’s price increase during that timeframe.

This trend highlights the growing dominance of institutional investors in the market, with research by CryptoQuant indicating that demand for Bitcoin spot ETFs from so-called “whales” is now twice that of retail investors.

Nevertheless, there are signs of resilience in the retail trading sector. “We’ve seen volumes bounce back somewhat,” McCarthy noted, adding that Bitcoin trading volumes on Coinbase have increased at a faster rate than on Binance, suggesting that retail interest may not be entirely extinguished.