Where did the smart money go? Retail investors flock to cryptocurrency, traditional finance is “forced” to open up new businesses
Under the guidance of institutions, more and more retail investors have begun to focus on the cryptocurrency market. If the first half of this round of bull market is the home court of institutions, then the second half of the “retail carnival” has quietly kicked off.
The “prosperity” of the crypto market vs the “loneliness” of the traditional market
Recently, the trading volume of the cryptocurrency market has surged, and the trading volume of stocks and derivatives has declined significantly.
In the crypto spot market, The Block data shows that the trading volume of crypto trading exchanges soared from 1.17 trillion U.S. dollars in March to 1.66 trillion U.S. dollars in April, while the data was less than 100 billion U.S. dollars in April last year.
Crypto derivatives have also ushered in a new round of climax recently. Take CME Group (CME) as an example. On May 3, CME announced the launch of a micro bitcoin futures contract. The trading volume in the first six days of listing exceeded 100,000, which shows how popular the market is for such small contracts. In addition, since the Bitcoin futures contract broke a new high in January this year, the average daily trading volume has reached 17,549 contracts, an increase of 57% compared to December last year.
It is understood that the micro bitcoin futures contract is a futures product launched by CME after launching bitcoin futures in December 2017 and Ethereum futures in February this year.
In addition to the ever-increasing trading volume, the crypto market sentiment has also reached rounds of climax: from the continued rise of Bitcoin prices to the skyrocketing NFT transactions on social media, from the listing of the first cryptocurrency Coinbase to Dogecoin & Shiba (SHIB) )’S carnival… If this market has an upper limit, it must be people’s imagination.
However, the traditional stocks and their derivatives markets seem to be somewhat lonely.
In terms of stocks, statistics from Jefferies, a well-known Wall Street investment bank, show that in April this year, the US stock market volume fell by 27% month-on-month, and the volume of stock options fell 14% month-on-month, both reaching their lowest levels since October last year. In addition, this downward trend is also true for the European Deutsche Börse and the Swiss Stock Exchange.
In addition, data from Tradeweb, a well-known bond, credit derivatives and bond ETF trading platform, showed that the average daily trading volume of all asset classes on the platform also fell to US$896.8 billion in April, which was slightly higher than the daily average of more than 1 trillion in the previous three months. Average daily trading volume in US dollars.
A bottom-up monetary revolution has arrived, and traditional institutions are being deconstructed and reshaped
Under the epidemic, the global economy has also suffered a heavy blow. People are eagerly looking for alternatives to the traditional banking system, and encrypted digital currencies represented by Bitcoin have become their first choice. After all, Bitcoin and its underlying technology provide these investors with the current best choice. People can conduct their so-called banking business without entering large financial institutions.
The latest data from Coingecko shows that the total market value of global cryptocurrencies is now about 2.54 trillion U.S. dollars, which has surpassed the circulation of U.S. dollars. According to data released by the Federal Reserve Economic Database (FRED) on April 29, the circulation of the U.S. dollar is 2.15 trillion U.S. dollars.
Obviously, the expansion of the scope of influence of cryptocurrency has not diminished in the slightest. Under the trend, traditional institutions, banks and other financial institutions seem to be unable to sit still. After all, the loss of customers means the loss of profits. For this reason, those companies that have been in the field of cryptocurrency in the past are also accelerating their pace; and those companies that have been on the sidelines have also changed their attitudes towards Bitcoin…
PayPal is the first mainstream payment platform to support cryptocurrency. In October 2020, it announced that it will follow the trend of global industrial layout and launch cryptocurrency payment services. In April this year, it completed the acquisition of Curv, an Israeli digital asset security company.
Under the leadership of PayPal, other companies have followed suit. Among them, even JPMorgan Chase, who had previously disliked cryptocurrencies, changed its attitude. JPMorgan Chase CEO Jamie Dimon has always been known for his skepticism of cryptocurrencies. He has bombarded Bitcoin several times before and labeled it “fraud”. But recently, he stated that although he is not a “supporter” of Bitcoin, many of his bank customers like it…
For a time, encrypted assets became the “guests” of these giants.
Recently, Bitcoin has taken another important step towards the mainstream market. CNBC reported that executives of the New York Digital Investment Group (NYDIG), a cryptocurrency custody company, stated that hundreds of U.S. banks are preparing to provide Bitcoin (BTC)-related services to their customers and will soon allow customers to purchase, Hold and sell bitcoins.
What is visible to the naked eye is that giants are scrambling to lay out cryptocurrencies, and the bridge between traditional currencies and cryptocurrencies has been built. The reason behind this is not so much embracing cryptocurrency as it is that they don’t want to lose their customers.
A researcher from Ouke Yunchain Research Institute said: “These traditional mainstream institutions frequently show good cryptocurrency for the following two reasons. On the one hand, the market is just getting hot, and under the influence of many star companies, no one wants to Laggard; on the other hand, the development of traditional banking and payment businesses has also faced a certain bottleneck. Now the bull market effect in the crypto market is obvious. Exploring cryptocurrencies can open up new businesses to better retain customers.”
In addition, he added: “Incorporating cryptocurrency into the traditional payment system can also change the extremely inefficient payment methods of traditional currencies, and explore more efficient, safer, and cheaper payment methods. These payment giants have precipitated the past development. The standard settlement process will also help the popularization and application of cryptocurrency in the future.”
Under the new round of currency revolution, whether it is active acceptance or passive acceptance, people in traditional finance have to re-examine the relationship with cryptocurrency, and the recent market reaction may intensify their pace.
Recently, the game post of the beginning of this year has reappeared in the market against Wall Street institutions. This time, it was the Dogecoin public who set off another resistance against the traditional mainstream elites in the United States. But this time, can the mass retail investors who dream of wealth succeed? It is not yet known. But an indisputable fact is that, unlike the skyrocketing “dog shit coin” a few days ago, since May 12, the cryptocurrency market has traded a “pump” in exchange for a moment of calm. But is this a harbinger before the storm or the darkness before dawn? I believe time will give the answer.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.