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The Role Retail Plays in Bitcoin’s Price

  • Learning about and understanding Bitcoin will lead to more adoption among retail investors.
  • Bitcoin’s acceptance by countries will create a convenient locale for spending and transacting bitcoins.
  • Retail investors are attracted to cryptocurrencies as investment assets.

Many individuals are often unaware of how the lack of financial education impacts them: information overload and sensationalism decay one’s understanding of an asset’s intrinsic value versus market positioning. With the stock market offering insufficient financial incentives, digital assets like Bitcoin provide investors with affordable and financially rewarding entry points. Yet, retail acceptance and understanding of Bitcoin can lead to a faster adoption rate.

Bitcoin: The Gateway Asset

The rise of Bitcoin and cryptocurrencies created a generational financial shift. According to a Bankrate survey, 5% of millennials agree that Bitcoin is a good store of value as the token will still hold value ten years from now. The same perception and affinity towards crypto was similarly displayed by young adults in previous years, as Bitcoin gained more media attention and became normalized within our personal perception.

An average of 98.9% of 2019 survey participants were familiar with Bitcoin, while the associated risk factor radically decreased in 2021. More importantly, unlike the general consensus of cryptocurrencies, Bitcoin is perceived more frequently as a “safe” investment as institutional interests have increased Bitcoin’s liquidity.

Although cryptocurrencies operate on the same underlying technology, their underlying network utility varies. Still, investor behavior towards cryptocurrencies remains the same, and their volatility plays a vital role in how retail and institutional investors command the new asset. Reuters reported that retail investors are embracing “wild price swings” as they yield better financial results.

Acceptance Builds Rapport

The push and pull between Bitcoin’s acceptance and regulatory pushback is proving positive for Bitcoin HODLers as El Salvador or Ukraine affirm crypto assets as a strand. Although this follows a PR standard, Bitcoin’s societal normalization will help to invalidate unfounded assumptions.

The B Word conference, much like other crypto philanthropic initiatives, is a means to normalize public perception and provide well-argued insights into the world of Bitcoin. However helpful their intentions are, framing a positive discussion is disadvantageous as it creates false assumptions.

Casey Carrillo claims that Bitcoin holders, and those who understand it, have “the responsibility to share, promote and defend it” to help propagate it across the network. What’s worrying is that this can create a “positive feedback loop” which can dismiss counterarguments that effectively help to best develop Bitcoin for the future.

Bitcoin has endured several epochs and does not require any endorsements for people to understand it. Digital habits take time to form, and 13 years is insignificant if users are not exposed to a new digital payment method. However alluring it is to guide and direct retail investors, their habits will be formed because enterprises will start to adopt and integrate cryptocurrencies.

On The Flipside

  • Regardless of whether businesses offer ways to spend Bitcoin, people are still HODLing.
  • The cult-like crypto following damages the reputation of a stable currency
  • Bitcoin has shown that it could not perform existing currency functions because of its volatility.

A Network Effect

Bitcoin is a novel currency because we are currently dependent on the established financial systems. Jurrien Timmer, director of Fidelity Investments, told CNBC that Bitcoin is seeing “coming of age” momentum in the adoption process, as previously only institutional investments were gaining knowledge and exposure with higher capital on Bitcoin.

Still, creating a global Bitcoin consensus in a timely manner involves several retail cycles, as Income Sharks highlights:

"The downside of mass adoption is getting a whole wave of completely inexperienced crypto traders who bring volatility."

Regardless, retail investors will impact the price of Bitcoin as they become accustomed to the volatility index. As more people start spending bitcoins instead of holding them, Bitcoin can gain mass adoption status. Until then, Bitcoin will remain a speculative tool for both retail and institutional investors.

Why You Should Care?

Bitcoin does not need to be preached and promoted, similar to a Ponzi scheme, as it will likely damage its market reputation. Although Bitcoin’s price behaves identically to the penny stock, retail will influence the price of BTC and its acceptance only if there are incentives to spend it.

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    This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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    Social media fanatic and cryptocurrency enthusiast with a 10x mindset. working with ICO’s and upcoming blockchain project. Worked with ICO’s before the first cryptocurrency boom in 2017 and still HODL-ing. Creative content writer with a passion for electronic music, Instagram and cryptocurrencies