are retail investors coming back or are they already here and if retail is already here do they have enough money to invest and if retail isn’t here yet how many new investors and inflows could crypto get these are just a few of the many questions that crypto investors have been asking especially as it relates to altcoins and this is because retail investors are the biggest buyers of altcoins which means that without them there’s no World season and that’s why today we’re going to do a deep dive into what’s been going on with retail investors and how actual retail adoption of crypto could someday lead to a crypto super cycle what is your name my name is Nick and this is a video you can’t afford to miss before we get into the weeds there are two misconceptions about retail that need to be addressed the first is that retail investment and Retail adoption are two different things things and this needs to be clarified because many reports about this subject imply that retail investors are also automatically retail users whereas there have been significant growth in retail investor numbers over the years the number of retail users has been lagging a bit and this is arguably because crypto deps and protocols weren’t cheap fast or easy enough to use this is changing fast and it it opens the door to exponential adoption of crypto in other words even if all the retail investors have arrived there is still room for exponential growth in the form of retail adoption and this could have profound impact on the prices of Select cryptos spoiler alert but the number of retail investors still looks like it could increase bigly but uh more on that in a moment now this ties into the second misconception that needs to be addressed and that’s the assumption that the 2021 cycle was somehow Superior to past and future crypto Cycles logically this is assumed because of the stimulus during the pandemic which saw checks sent to retail investors around the world well apparently this is nothing more than a narrative if you’re a longtime viewer of the channel you’ll know we summarized a research report by the Federal Reserve which found that just 0.02% % of stimy checks in the US were spent on crypto they literally had next to no direct effect on the crypto Market of course the unprecedented pandemic stimulus did have an indirect effect on the crypto Market Global liquidity aka the money supply Rose by roughly $20 trillion over the course of just two years obviously some of this money eventually found its way into the markets including crypto and if you were a recent viewer of the channel you’ll know that we’ve noted in our analysis of the crypto Market that Global liquidity has been rising fast since 2022 specifically by around $15 trillion and Counting as such the current liquidity backdrop is similar to what it was during the pandemic not only that but it’s easy to forget that the pandemic was a truly difficult time for a lot of people a case in point 60% of the stemi checks sent out to retail investors were used to pay down debts or to put into savings the remaining 40% was spent mostly on goods and services particularly food and beauty products it goes without saying that the macro backdrop isn’t looking too good these days either but it’s objectively better than it was back in 2021 when there were constant lockdowns supply chain disruptions Mass layoffs and extreme uncertainty about whether we’d ever live a normal life again things like trade Wars and Global instability aren’t nearly as bad as a global pandemic that basically shut down most of the planet in fact the current macro backdrop could be the most optimal because it’s bad enough to justify more stimulus but not bad enough to syn the world into a crisis yet at the same time our crypto regulations in the US are effectively being rolled back and Regulators are in the process of approving more ways for any new liquidity to flow into crypto for instance via ETFs as a cherry on top the sitting US president has been accumulating altcoins and is going to launch his own di protocol given these facts one could argue that the current crypto Market cycle is superior to previous cycles and this fact needs to be addressed the only reason why most people don’t believe this is because crypto prices have not yet reflected this new reality particularly altcoins as always this has everyone looking for reasons why and the absence or weakness of retail investment has been a popular explanation oh and by the way guys if you enjoying this video so far then let us know by Smashing that like button and don’t forget to subscribe and ping the notification Bell to make 100% sure you don’t miss our next video now we can get into the weeds according to a 20124 report from crypto.com there are roughly 617 million crypto investors globally and this is consistent with the number of users on most exchanges assuming a minor overlap but it’s safe to say that not all crypto investors allocate equally to the crypto Market according to a 2024 report from chainalysis North America Western Europe and Eastern Europe account for most of the onchain value transferred put differently onchain analysis suggests that most of the money being invested in crypto comes from North America and Europe which kind of makes sense and this is where things get interesting it’s not entirely clear what percentage of North Americans are invested in crypto estimates seem to vary between 20 and 40% the most frequent estimate we found was that 30% of North Americans hold crypto in the case of Europe it seems to be closer to 15% do note that the actual numbers are much lower as these figures include those who previously invested in crypto as well to put things into to perspective research from visual capitalist and the world economic Forum suggests that roughly 60% of North Americans are invested in stocks and that roughly 30% of Europeans are what this means is that the total number of crypto investors could still double and you’ll recall that we’re starting from a really conservative level the actual growth could be closer to three to four times however this assumes that it will be just as easy to buy stocks as it is to buy crypto for a long time this wasn’t the case particularly for investors in the United States which account for over 20% of all money invested in crypto this also wasn’t the case in Europe which lacked clear crypto regulations in case it wasn’t clear enough this is changing in the US and it’s already changed in Europe uh the EU passed its markets in crypto assets or Micah regulations back in 2023 since that time we’ve seen large financial institutions across Europe Europe including Mega Banks offering crypto to their clients meanwhile in the US asset managers have been slowly but surely encouraging their investors to get more exposure to crypto ever since spot crypto ETFs started being approved while it’s true that most of this investment has been directed to the spot Bitcoin ETFs what’s important is that other cryptos are just as easy to buy as other tradire assets with every passing day this is more and more true in the US not only that but it’s worth remembering that the numbers we just crunched aren’t limited to retail investors the total number of crypto investors in these regions could double or more including both institutions and Retail this is where things get interesting again because institutions and Retail have similar reasons for why they will or won’t invest in crypto as you might have guessed the number one reason why institutions and Retail are hesitant to invest in crypto is because of regulations and volatility now although not much can be done about the volatility aspect I’ll remind you that the regulation aspect is improving with each passing day seeing a US president invest in crypto and launch a defi project could also Inspire confidence among investors and seeing the US government create a strategic crypto Reserve would for sure but uh that’s a topic for another time now as for the next reasons why institutions and Retail invest in crypto these are accessibility and the potential for returns uh for context you cannot invest in fractions of shares you have to buy the entire share in crypto though you can buy fractions of crypto and many cryptos also have very low price taxs and this is what’s meant by accessibility especially as it relates to retail the potential for returns is well self-explanatory and it’s the biggest part of why over 70% of both retail and institutional investors are planning on continuing to invest in crypto in 2025 this is according to reports from Kraken and Signum uh respectively which we also summarized here on the channel and if you watched those summaries you’ll know that institutions and Retail both prefer established altcoins to the newer ones so to recap most of the money invested into crypto comes from North America and Europe the number of crypto investors in these regions could theoretically double or more as it becomes easier for them to invest in crypto through spot ETFs and the like all else being equal then the crypto Market could theoretically experience double the amount of inflows that it received in previous Cycles the catch is that the amount of inflows each crypto receives will not be equally distributed and if you watched our recent video about altcoin dilution you’ll know that the total crypto market cap tends to follow a parito distribution and this means that the largest cryptos get most of the inflows the second largest get less of the inflows and the third gets even less than that and so on and so on in case you missed it both retail and institutional investors prefer established altcoins to newer ones in the case of retail they tend to prefer altcoins that have a low price tag have a strong narrative and are easy to buy some retail investors also make sure that most of the supply is in circulation so that they don’t get dumped on others know that the smaller the market cap the more potential a crypto has but the key things in this case are a low price tag a strong narrative and accessibility and what’s fascinating is that the third Factor seems to have changed in previous Cycles altcoins listed on exchanges were the most accessible to retail in this cycle it seems that altcoins on fast lowcost blockchains like Sal are the most accessible to retail assuming they have userfriendly front ends like the Phantom wallet and this means that altcoins with a low price tag a strong narrative and accessibility via sexers or lowcost dexas could see the largest share of new inflows from new retail investors that’s essentially established altcoins Plus altcoins on layer one blockchains like salana and sui and Layer Two blockchains like Bas Institutions the research reports we’ve summarized suggest that they’re more interested in cryptos with utility and this is why so much VC investing has historically been directed towards crypto infrastructure crypto infrastructure had inherent utility regardless of use cases it supported however a recent report from Galaxy digital suggests VCS are pivoting to actual use cases now not surprisingly many of these investments into socalled web 3 cryptos have been related to gamey and social fi and this isn’t surprising because ENT entainment is the primary use case of the current web 2 internet the most popular websites in the world are social media sites like Facebook and X it’s estimated that as much as 70% of all internet traffic is related to music and video streaming this is exactly why some crypto VC firms have been doubling down on crypto projects like ton coin which are already integrated with popular web 2 Platforms in this case telegram it’s also easy to forget that we saw gaming Studios and social media sites integrate nfts in the prior cycle the heavy VC investment and hype around gamey and social fi suggest cryptos in these niches will also see lots of investment it’s even easier to forget that these use cases will be more accessible than ever before this is not only because we actually have blockchains that are scalable enough to handle the millions and billions of users these crypto projects could see but also because we’re starting to see new ways of accessing these crypto use cases such as salana blockchain links and su’s upcoming handheld gaming device the caveat is that crypto investment could hit a plateau this cycle just because it’s possible that all the investors who haven’t allocated to crypto already could do so this cycle to be clear it doesn’t mean that crypto won’t see gains in the future just that most of the gains have been made in percentage terms overall and this relates to the next Frontier for growth for the crypto Market actual crypto adoption last year Crypt VC firm a16z published an impressive report wherein it estimated the number of actual crypto users uh for reference this is extremely difficult to calculate because many crypto users have more than one wallet and there are also millions of bots transacting on multiple blockchains like the percentage of crypto investors a 16 identified a range rather than an exact number and these are between 30 and 60 million real monthly active crypto users so let’s be conservative and say that there are 60 million real monthly crypto users this accounts for just 10% of the total number of crypto investors to put things into perspective the internet had roughly 60 million users in the mid 1990s even though crypto technically isn’t a new internet It ultimately seeks to disrupt established players in web 2 and to refresh your memory that’s mainly social media and gaming all forms of online entertainment and those of you who were around during the previous crypto bull market will remember how much speculation there was around the promise of web 3 in short investors of all kinds recognized that social media companies owning and selling all the content we post was not a very fair deal they also recognized that it wasn’t fair that people pour effort into video game experiences that they can’t actually monetize but when you realize that web2 social media platforms and games have hundreds of millions sometimes billions of active users you understand how much potential similar web 3 cryptos could have if they can capture even a fraction of these user bases the price of their respective coins and tokens well it could explode notably this includes the blockchain CHS that these web 3 cryptos are on not to burst anyone’s bubble but there aren’t very many blockchains that can currently support Millions much less billions of users a data from chains speec suggests that only Sonic the internet computer and eptos are scalable enough for this but uh let’s just say that crypto scalability tends to work very differently in practice than it does in theory more importantly it’s fundamentally the web 3 protocol that matters if it’s fast cheap and intuitive to use then the end user couldn’t care less about which blockchain it’s on and funnily enough there also seem to be many web 3 protocols that currently meet these criteria most of them still involve things like saving seed phasers and paying gas fees which are a massive hurdle to genuine Mass adoption and this is where all the VC investment in infrastructure is starting to pay off because it’s becoming easy than ever to abstract away these annoying aspects of crypto remember that some crypto projects have started selling their own Hardware too now crypto Hardware could very well be the key to mass adoption this cycle this is something we’ve been mentioning more in recent videos and it’s simply because we already saw it happen once before when salana announced the owners of The Saga phone would be getting an airdrop that was worth more than the phone the device device quickly sold out and this is an incentive mechanism that could be repeated with not just other crypto Hardware products but even software Services crypto wallets like Phantom raising hundreds of millions of dollars has led to speculation that they could eventually airdrop a token and this would be an excellent way to incentivize users to adopt the wallet and interact with its web 3 daps we reckon it’s only a matter of time before this Pandora’s Box is opened the result of all of the above could be an exponential increase in actual crypto adoption that starts as soon as this cycle whereas the usage of things like defi protocols tends to rise and fall with the crypto Market the usage of truly enjoyable social F and gamey projects could continue to rise regardless of market conditions in turn this could translate to super cycle style price action for their respective tokens unfortunately it’s still too soon to say which crypto projects could experience this Perpetual growth fortunately this should become clear by the end of this crypto bull market even if their respective tokens do not continue to see price growth during the crypto be Market if the adoption of the underlying protocol continues it will be clear that they will be the top performers in the next cycle in some then the total number of crypto investors could still double or more and that includes both retail and institutional investors this is something that could happen as soon as this cycle and all the evidence suggests that most of the capital will flow into established altcoins that have a strong narrative and utility the altcoins that perform the best in future Cycles are likely to be those that have the most potential for actual adoption along with the layer one or layer 2os that they’re built on this crypto adoption could still grow at an exponential rate turning into an exponential rally in price it’s too soon to say for sure which cryptos these will be but with a bit of luck we will find out by the end of the current crypto cycle and once it becomes clear we’ll be sure to let you know now if you enjoyed that video I’ll see you in the next one neck out [Music]
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