Bitcoin Retail Activity Remains Low Despite Recent Rally

Election 2024 coverage presented by
One of the biggest questions in the crypto industry is whether retail is participating in this current rally. Retail entrance often marks a sign of euphoria or greed and, in some cases, is thought to be a leading indicator of a top in the market.
With bitcoin (BTC) gaining of late to within 15% of its record high, this article will explore what the retail activity is indicating.
One important indicator of retail participation is to check where crypto exchange Coinbase’s (COIN) app ranks in app store downloads.
In the 2017 and 2021 bull markets, Coinbase became the number one downloaded app near those tops, and at bitcoin’s recent market peak in March of this year, it ranked in the top 5,, according to @CoinbaseAppRankBot.
Coinbase currently is ranked just 438, not far above its lowest level of the year of about 500, indicating a continued lack of retail interest.
Investors who have bought bitcoin within the past 155 days are considered short-term holders (STHs).
This cohort tends to be those chasing the market, buying as the price starts to climb, and history shows peaks tend to correlate with high STH supply. Indeed, five recent major tops in bitcoin going back more than a decade have coincided with peaks in STH supply. This current rally, though, has come alongside a decline in STH supply, suggesting no top as of yet.
Looking at transfer volumes by size, values below $100,000 are typically considered retail volume and anything above that level can be considered institutional.
Analyzing the past three bull runs, peak retail volume typically coincides at the top of bull markets. Currently, total retail transfer volume is only around half of what was seen in the 2024 peak.
Glassnode data also confirms that bitcoin fees are at cycle lows, roughly generating only $500k daily, while active addresses are below the 365-day moving average which shows a lack of daily active users.
Speculative trading on-chain, either through inscriptions on bitcoin, or transactions interacting with non-fungible tokens (NFTs) on ether {ETH}}, is another retail participation indicator. In bull markets, we tend to see high fee levels as investors speculate on-chain, with the 2021 market top being a prime example. Currently, however, NFT gas usage on ether is only around 2% versus 2021 when the percentage of gas consumed was at 40%, according to Glassnode data.
A different picture is suggested by the action in memecoins, where things are exploding. These tokens are largely a retail-driven category, according to X account @MustStopMurad, which did a presentation on the subject at Token 2049. Murad shows that new memes are up on aggregate by 2,040% and old memes as a whole are up 105% year-to-date.
Edited by Stephen Alpher.
Disclosure
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.
As the senior analyst at CoinDesk, James specializes in Bitcoin and the macro environment. Previously, his role as a research analyst at Swiss hedge fund Saidler & Co. introduced him to on-chain analytics. He monitors ETFs, spot and futures volumes, and flows to understand Bitcoin.