Where are Bitcoin’s Retail Investors?

Bitcoin continues to languish at a mere 160 percent gain for the year. We’ve gone months without FOMO, dropping from $14,000 in July to roughly $8,000 today.

Some say bitcoin’s price will go as low as $6,000 . . . or worse.

Surely, we’re still in a bull market, right? Right???

If that’s the case, where’s the enthusiasm? Why isn’t everybody buying bitcoin? What kind of bull market is this?

People need to show up!

Your average person is still no-coining

As the end of 2017, at the height of the bitcoin bubble, when “everybody” bought some, credible sources estimate less than 30 million people held bitcoin worldwide. U.S. holders probably totaled 6 to 15 million people.

(Yes, that’s a wide range. Different sources give different numbers.)

While many people have come into bitcoin since then, they still represent a very small group. According to Statistica, there are only 45 million bitcoin wallets in the world today.

Based on reporting from U.S. exchanges, less than 10% of Americans have a cryptocurrency account. Other countries would probably report similar or lower numbers.

Compare that to stocks.

National Bureau of Economic Research claims over half of the U.S. owns stocks (upwards of 170 million people when you count all households). I don’t have figures for other countries but various sources claim over 500 million people worldwide own some sort of investment product.

Not bitcoin.

Don’t know, don’t care, don’t want to

No-coiners to you: go away! Credit: Josie Stephens

Most people have heard of bitcoin. They may not know what it does, but they’ve heard of it.

Overwhelmingly, they do not talk about it.

It just doesn’t come up much. One of my friends works in tech and can’t even mention bitcoin. His coworkers think it’s stupid and useless. Simply saying “bitcoin” sends his reputation into the shitter.

My bitcoin meetup group has taken an “only if they bring it up first” attitude towards bitcoin conversations.

I have the pleasure of talking to people about cryptocurrency when we talk about my book, Consensusland. Even then, it’s not “hey, tell me more about bitcoin.” It’s more like this:

“Hey Mark, I heard you wrote a book! What’s it about?”

“It’s about a country that runs on cryptocurrency.”

“Cryptocurrency? What’s that?”

“Have you heard of bitcoin?”

“Bitcoin? Yea, of course. Everybody’s heard of bitcoin. Oh, you’re not one of THOSE guys, are you?

This is how 75 percent of my crypto conversations go

After seeing how quickly their eyes glaze over in boredom, we shift to a different topic.

Does this seem odd? After all, in 2017, people mortgaged their houses and sold all their possessions to buy bitcoin at $20,000. Millions and millions of people opened up Coinbase and Binance accounts. Everybody bought into ICOs. Lambo, moon, etc.

Now they suddenly don’t care? They don’t want their money back?

Where did they go?

Bitcoin wallet addresses have doubled since December 2017. Active wallets remain as active as during that 2017 boom. Recently, bitcoin transactions hit all-time highs. Bitcoin payment services have started seeing actual users.

Where did all that activity come from?

Not from retail, folks.

It was you, me, and the whales.

Retail was never into bitcoin as much as the media made you think

According to Blockchain.com, there were 22 million bitcoin wallets before 2018. Many people use several wallets, so the actual number of bitcoin holders was lower—maybe 10 million or less.

Of course, exchanges combined many people’s bitcoins into their custodial wallets so you have to assume Statistica’s report undercounted.

It’s hard to get compelling data (one of my sources called that a “heuristic nightmare”). Safe to say, it’s less than 1 percent of the world’s population (70 million people). Probably half of that.

Of those that hold bitcoin, most hold little. Today, 70 percent of wallets have less than $80 worth of bitcoin (equivalent to $200 at bitcoin’s 2017 peak).


BitInfoCharts Bitcoin Distribution


It’s likely that retail never came into the market in large force. More likely, 2017’s boom came from a sudden, frenzied rush of money and media interest.

It all seemed real because you knew a few people who had crypto.

(Unless you lived near Silicon Valley, California, in which case everybody you knew had crypto.)

If that’s true, bitcoin didn’t go boom in 2017 because a massive amount of money entered the markets, but because a few people put a little money into a tiny asset all at once.


Bitcoin Bull Market Proves the Crypto Bubble Never Burst


Think about it like scooping a pint glass into the ocean and pouring it into a thimble. Barely anything for the ocean. A deluge for the thimble.

As always, insiders get in before retail

Over the past year or so, Harvard, Yale, MIT, University of Michigan, Virginia’s Fairfax County pension fund, one of the Rockefeller family offices, several VCs, and other large investment funds bought cryptocurrency.

According to Altcoin Daily, large buyers bought a bunch of bitcoin during the 2018 bear market and the recent dip, based on research by Glassnode.

In fact, we’ve never had more bitcoin sitting in HODL wallets.

You didn’t even notice.

This activity comes from whale HODLers and professional money managers who make money for a living.

They have access to legitimate researchers at Yale, Morgan Stanley, Foley & Lardner, and Gartner. They pay thousands of dollars for analysts, advisory services, and insider newsletters.

When they talk about bitcoin, they’re talking to people at licensed, regulated firms like Greyscale, Morgan Creek, Pantera, and M12.

They get their advice from experts, not some blogger with a bitmoji for his profile picture.

Some call them “smart money” or “institutional investors.” Regardless, they’re always the first ones in on a sweet deal. While everybody’s panicking about a sell-off, they’re smiling.

To wit, look under “Institutional Investors” in this “Anatomy of a Bubble” chart:

Anatomy of a bubble with smiley face over "bear trap"
They are smiling back at you!

Head in the sand or sanest people in the room?

Retail investors do not have access to financial pros, social networks, or industry research.

Plus, most of them have bills and other things to buy. They probably don’t have any money to invest in anything, especially not bitcoin.

Do you expect them to plunk any money into a Coinbase account? Especially when bitcoin’s price could crash at any moment, knowing they’ll have to HODL for a year or two (or more)?

That’s not a knock on retail investors. Cryptocurrencies are risky, volatile, poorly-regulated assets. While that doesn’t phase us, it bothers lots of people.

Maybe retail investors know better than we do? After all, if bitcoin crashes, whose government will bail us out? Is it possible we’re spending all this time, effort, and development on a dead technology—except we don’t know it yet?

We shall see.

I suspect retail investors will show up eventually. Wall Street’s making it safe to buy and sell crypto, developers are making it easier to use crypto, and market cycles are on schedule to push prices up again.

Meanwhile, we can take comfort in knowing bitcoin—and the rest of the cryptocurrency community—continues to grow without them.

Mark Helfman is author of Consensusland, a Readers’ Favorite 5-star book about a country that runs on cryptocurrency. You can also catch him on Medium. He publishes every Friday.