Bloomberg
Plumber buying doge shows the power of retail investors in Crypto
(Bloomberg) – A rocky weekend for the legions that plunged into all cryptocurrencies following the direct listing of Coinbase Global Inc. did little to undermine its grip on retailers. Dogecoin collected another 20% on Monday, even after most of the biggest signs, including Bitcoin, fell further. According to Mike McGlone, a commodity strategist at Bloomberg, the recent run-up to the joke is indicative of the retailer’s involvement in crypto markets. His plumber recently told him he was shopping. For McGlone, it’s a result of the ‘perfect storm’ of pandemics, a lot of cash in the system and investors’ ability to speculate 24 hours a day. “Markets will never change – it’s just 24/7 and the easiest access to history,” he said. This is an excellent example of gambling for fun, unless participants are losing too much money, especially since they have taken too many risks in the casino. ‘While Coinbase’s debut in the market was undeniably a watershed moment for the shift of crypto to the mainstream, this weekend’s rout delivered a hard refreshment on one of the market’s basics: violent price fluctuations are common. A false report from an anonymous Twitter account that the US Treasury was suppressing money laundering with cryptocurrencies was enough to cause Bitcoin to plummet to as many as 15. % on Sunday, days after setting a record $ 64,870. While the low dive liquidity likely exacerbated the nose dive, the largest cryptocurrency in the world fell another 3.5% on Monday. That an erroneous tweet could torpedo prices is a reminder that even for all the talk of Wall Street’s growing scope of crypto, individual investors have plenty. of charge to throw around. This dynamic occurs especially on weekends when traditional commercial banks go dark while Bitcoin and other cryptocurrencies continue to change hands. Although the direct listing of Coinbase is an important milestone for crypto, for institutions and traders who face crypto, it is an important first step in learning to live with the volatility. “This is rather an introduction to all the people who have been using Bitcoin or crypto in the past week because of Coinbase that crypto markets can be very volatile,” said Philip Gradwell, chief economist of crypto data tracking chainalysis . “In a sense, this is nothing new if you’ve been in the business for a few years.” Even by the crypto standard, sentiment seemed stretched late last week. Bitcoin rose in the run-up to the long-awaited listing of Coinbase, which at one point brought annual gains to more than 118%. The enthusiasm has grown in so-called altcoins like Dogecoin, which has risen by more than 13,000% in the past year. According to Bybt.com data, about $ 9.3 billion was liquidated in so-called long Bitcoin futures positions, followed by another $ 700 million on Sunday, according to Bybt.com. A withdrawal from Bitcoin was ‘inevitable’ given the degree of froth, Galaxy Digital founder Michael Novogratz tweeted over the weekend, adding that “we will be fine in the medium term” as institutions enter space. Shifting the power dynamics in favor of the institutions will be the “Holy Grail” for Coinbase, BI analyst Julie Chariell said last week, as companies are less likely to dump their businesses as quickly as retailers. Although individual investors accounted for only 36% of the stock market during the quarter ended December 31, more than 90% of Coinbase’s revenue comes from retail operations. Whether the cryptocurrency exchange is successful remains to be seen. But even if Bitcoin wants to cut a spot in portfolios and on corporate balance sheets, except like MicroStrategy Inc. and Tesla Inc., will likely still belong to the individual investor this weekend. “The retail investor still dominates the crypto market,” Steven McClurg, CIO of Valkyrie Investments, said in a telephone interview. “If you see such an action over the weekend, it’s just when all the institutional traders are asleep or not working.” For more articles like this, please visit us at Bloomberg.com. Sign up now to stay ahead with the most trusted business resource. © 2021 Bloomberg LP