Enabling Investors: Retail Participation Key for Bitcoin’s Sustained Long-Term Growth

Since its public release in 2009, Bitcoin has established itself as the world’s best-performing asset. The unprecedented returns have popularized it among new communities of investors, and the subsequent retail participation has grown at unprecedented levels to uniquely position it at the levels it has reached today. Significant success over the past decade has also attracted participation from financial institutions and governments; however, the adoption rate among retail investors remains the catalyst for growth, considering the long-term outlook.

A recent report suggests that over 9.5% of existing Bitcoins are owned by retail traders. While the percentage may look minuscule, they turn out to be one of the most integral parts of Bitcoin’s price action on a continuous basis. This is because retail participation often includes short-term goals, and their transactions remain mostly range-bound. Larger investors’ communities, like the whales or institutions, tend to sustain their wallets for longer periods, which is often not the scenario with individual participants. Despite this fact, their continuous exchange of Bitcoins establishes a circular aspect in trading, essentially sustaining Bitcoin’s movement in bullish or bearish momentums.

Importance of retail participation in Bitcoin

At the time of writing this article, Bitcoin is trading at the level of $115,000, up from $58,000 a year back. While several aspects have been at play that have contributed to this increase, the participation of new retail investors has been integral. As the investor base has enlarged, it has given Bitcoin the necessary push to break the $100,000 level. Even at the current level, the increase of retail participation is being considered as one of the drivers to sustain the growth in the future.

With retail participation, Bitcoin receives the much-required agility that essentially reduces the dynamism of the asset. In layman’s terms, more adoption means more investors remain fixated on their goals, not become reactive to every market trend. While Bitcoin is known widely for its extensive volatility, more retail adoption could be integral to reduce this aspect and power the price action towards long-term growth.

At present, analysts believe Bitcoin’s next psychological challenge would be to overtake the $150,000 level. With more retail participation, this is an aspect that could be addressed in a comprehensive manner, with the upward push coming from all across the world. Furthermore, retail participation would also indirectly push for more methodologically aligned regulations or taxation around the world, opening up more investor attraction for the asset.

Obstacles to retail participation

Retail participation in Bitcoin is facing several levels of problems around the world. To begin with, several countries like India have mandated high taxation on capital gains on Bitcoin and other virtual digital assets (VDAs). With increasing retail participation, an effective stance could be established that may lead the governments to reduce the taxation. Furthermore, being a digital asset only, Bitcoin would require more internet penetration in rural areas around the world, which would enable new investor communities emerging and assimilating with the existing ones — essentially helping BTC to grow in the right direction.

Another challenge of retail participation in Bitcoin could be regulatory uncertainty around the world. Several nations in the world have banned the investment in Bitcoin and other VDAs, while there are a few that are advocating for establishing regulation frameworks of the asset. In this, Bitcoin essentially loses the autonomy it has enjoyed so far since the last decade, and could have a damaging impact on retail participation. In case of decreased retail participation, Bitcoin’s long-term future will also have a similar outlook, which would be challenging for millions of investors.

Low public awareness regarding Bitcoin and its intricacies could also be identified as an obstacle for retail participation. While significant numbers of individuals know the unprecedented returns BTC have been able to generate, very few understand how it works. If this challenge could be overtaken, BTC is expected to become even more popular among the investor communities around the world, and their participation could also be increased as a result.

Looking ahead

Bitcoin’s long-term future remains bright, and retail investors could expect the continuation of value creation in the upcoming years. The increase of more retail participants would be integral in this aspect, and is being considered as one of the primary growth drivers. The participation of retail investors in Bitcoin also highlights the trust the asset has garnered from its users. However, it is important for retail investors to understand the intricacies of Bitcoin before making up their minds to invest in the asset, along with a comprehensive due diligence.