After experiencing the 2022 bear market followed by some relief in 2023, the market participants expected another 2021-like bull in 2024. The markets woke up to some extent but they were largely concentrated around the flagship token, Bitcoin. The markets remained elevated during the first quarter, which attracted a massive bearish influence that not only dragged the BTC price but the entire crypto market.
Now the question arises: whether the crypto markets will demonstrate yet another 2021-like bull run.
One of the main reasons for the BTC price rally in Q1 is said to be the launch of the spot BTC ETF. With the inception of institutions into the crypto, retail traders have taken a partial exit from the markets. The institutions are accumulating BTC now and then but the market volatility has dropped, which is largely dependent on the retail traders. However, these traders seem to have stopped actively participating, which has circulated bearish & uncertain clouds over the markets.
One of the popular analysts, Miles Deutscher, in a thread, explains the reasons why the retail traders may have taken an exit.
The analyst mainly focuses on answering the question, Where is retail right now? Will they ever return to crypto? He considers the price action in 2021-2022 and mentions 5 reasons why altcoins will not be flying just like in 2021.
- The primary driver for the 2024 upswing was the BTC ETF, which is vastly different from the previous one, the macro conditions.
- The normal liquidity flow before ETF was Bitocin-Ethereum-Large Caps-Altseason. However, with the liquidity directed straight towards the ETFs, it doesn’t have a direct liquidity flow into altcoins, changing the market dynamics.
- Altcoins have been heavily underperforming this cycle as their dispersion is at its peak. The reason could be too many launches but very few get the required liquidity.
- During the 2022 bear market, a large number of retail traders have had huge losses and have experienced huge damage both physically and reputationally.
- As a result, the fundamental belief in crypto has reduced as the traders believed in long-term investment before 2021 and now look out for short-term gains.
The retail traders had entered the market in March but it remained only for a short time frame. Since then, altcoins have remained stuck in a steep descending trend. However, they may return if the Bitcoin price breaks above $73,750 and forms a new ATH. Moreover, a rise to $100K may renew interest in crypto as a whole.
