The flagship cryptocurrency, Bitcoin continues to be the community’s favorite as its value hovers over $50000 while exhibiting strong potential for further growth. The positive sentiment surrounding BTC has increased overall community participation and attracted a lot of institutional investors.
While it was speculated that trade volumes of institutional investors would surpass their retail counterparts, recent studies have shown otherwise. The first study conducted by JPMorgan Chase using data from Square and PayPal indicated that retail investors purchased over 187,000 BTC in Q1 2021 against 172,648 BTC by institutions based on fund flows, CME Bitcoin futures positions and other official announcements.
The leading crypto exchange OKEx’s research arm, OKEx Insights in partnership with Catallact – an open analysis platform for financial data decided to verify these claims by conducting its own research. As a part of the study, they analyzed on-chain data provided by Catallact to identify the roles played by retail traders and institutions in influencing the Bitcoin bull run.
Bitcoin Wallets Helps Identify the Trend
Being a transparent ledger, Bitcoin blockchain allows users to view all transactions happening over the network. While p2p transactions are much easier to identify for analytical purposes, large on-chain transactions, mostly executed by centralized crypto exchanges, and other funds do not offer conclusive information on individual spending or buying trends.
BTC addresses with small balances rose steadily in Q1 2021. Source: Catallact
To avoid confusion, the study does not consider wallets with a balance above 1000 BTC as those belonging to retail investors. There was a noticeable fall in the number of such addresses during Q1 2021. Meanwhile, address with balances anywhere between 0.0001 and 0.01 BTC registered a 300% surge during the same time, signifying the entry of many retail investors during the bull-run phase.
For further verification, the researchers compared the Q4 2020’s bull market trend with that of the latest quarter which confirmed their findings. On the flip side, the number of smaller bitcoin transactions executed by retail investors was much lesser than expected. A peek into historic data shows that the prevailing trend goes back by at least three years and over the duration value in addresses with a balance over 10000 BTC has fallen by at least 500000 BTC while those holding 100-1000 BTC and 1-10 BTC increased by 1.7 million BTC and 500000 BTC respectively.
Overall, the interest in Bitcoin among retail, institutional as well as derivatives traders is at an all-time high. While the demand among crypto whales and institutional investors is subdued in comparison to retail investors, the increased use of custodian services for BTC safekeeping has increased. These developments, when taken in conjunction with a reduction in transactions on the network and increased interest in BTC derivatives have led to the conclusion that more and more individuals are purchasing BTC to hodl and they may not be spending them in foreseeable future.
The OKEx Insights-Catallact study has taken all these factors to account to conclude that institutional investors still command the market, while retail investors gradually gain ground. There is a good chance that retail investors will take the driving seat to guide the market in near future, but for now, institutions continue to be ahead.