The crypto market landscape is undergoing a significant transformation as professional traders adopt a cautious approach, despite Bitcoin’s impressive performance throughout the year. While Bitcoin has witnessed substantial gains, the appeal of crypto trading has waned for many experts.
Changing Dynamics In Crypto Trading
Data from Bitstamp indicates that, despite Bitcoin’s remarkable year-to-date gains, the influx of professional traders into the crypto market remains limited. Retail trading volume on Bitstamp’s US platform has grown marginally from 33% to 35% since the year began, while global retail volume has increased from 8% to 9%.
A Shift In Professional Traders’ Sentiments
In conversations with Bloomberg, several pro traders revealed that they have lost interest in the crypto market. Even those who once made substantial profits in the space now express reservations. The collapse of FTX in November 2022 played a crucial role in undermining confidence in the crypto market.
Peter To, a 34-year-old professional stock trader based in New York, narrated his crypto trading journey, noting that he made $1 million by trading Bitcoin during its bullish phases in 2013 and 2017. However, despite Bitcoin’s 110% surge since the beginning of the year, To remains unconvinced about reentering the market.
To comment, “Bitcoin is not as volatile or as driven as it was. For traders like me who are hunting for inefficiencies in the market, it’s not as interesting. The allure is kind of gone.”
Similarly, Craig Murray, a 23-year-old trader who claimed to have earned over $200,000 from crypto trading, shared his perspective. Murray decided to exit the crypto space after hearing rumours from industry contacts about the impending collapse of FTX, a prominent crypto exchange. The uncertainty surrounding the exchange’s future was enough to drive him away from the market.
Murray stated, “That kind of put me over the edge. I just decided it wasn’t worth it. Why would I have my money in this space when there’s a chance that one day it could just all go away?”
Also Read: Sam Bankman-Fried: FTX Founder Convicted on All 7 Criminal Counts
Indications Of A Declining Crypto Market
Decreased retail volume isn’t the only sign of the changing dynamics in the crypto market. The decline in weekend trading activity also suggests that traders have become more risk-averse. Velo Data, a crypto data platform, reported that weekends with significantly lower trading volumes have become a common occurrence, despite a history of relatively equal volume throughout the week.
The shift is evident in Coinbase’s latest earnings report, which revealed a 12% decrease in total transaction revenue between the second and third quarters of 2023. Coinbase attributed this drop to reduced market volatility. As the only publicly traded crypto exchange and one of the largest spot market trading venues, Coinbase’s performance is a barometer for the broader market.
It’s important to note that the decline in trading sentiment is not exclusive to the crypto market. According to JP Morgan Chase and Co., retail investment in equities also saw a 40% decline from the beginning of 2021 to the end of 2022.
In Conclusion
The crypto market’s landscape is shifting as professional traders exhibit a cautious approach, with decreased trading volume and weekend activity acting as key indicators of this transformation. The decline in pro traders’ interest in crypto can be attributed to factors like reduced market volatility and apprehension stemming from past market events. This shift in dynamics suggests that the crypto market is maturing and experiencing a transformation in trading behaviour.
Discussion about this post