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Since the explosion of ICOs last year, the cryptocurrency market has undergone some noticeable changes. While the price of Bitcoin remains well below its all time high of 2017, institutional investors are replacing retail investors and high net-worth individuals, becoming some of the largest buyers of cryptocurrency. According to a report from Bloomberg, buyers such as hedge funds have become more involved in the cryptocurrency market through private transactions.
Coinbase has also seen a large drop-off in active users, along with publicly-posted trading and transactional volumes. A Bloomberg report on data compiled by Tribe Capital shows that the number of active (continually buying and selling crypto assets) U.S. customers on Coinbase has declined by approximately 80% since its December 2017 high.
“Due to regulations, one has to now be an accredited investor to have the best deal flow. The retail market isn’t currently built for ease, if someone wants to invest in a portfolio they have to sign up for multiple exchanges, move money across accounts, set stop losses, use hardware wallets, etc, Parul Gujral, Founder and CEO of Snowball, told me.”
And while cryptocurrency fundraising through Initial Coin Offerings (ICOs) brought in billions of dollars from retail investors last year, a new report by Diar.co revealed that roughly 70% of ICOs are currently worth less now than when they were originally released. In turn, retail investor participation in the crypto market has dropped off.
In an attempt to bring retail investors back into the cryptocurrency market, new consumer-grade solutions from Coinbase and other companies are being launched to provide tools to “smartly” navigate the murky crypto market.
Coinbase Bundle, for example, is a recent solution from the popular cryptocurrency exchange, Coinbase. According to Carly Emmer, a Product Manager for Coinbase Bundle, the product was developed for customers of Coinbase's consumer exchange product and was created based on their feedback about buying their first cryptocurrency.
Coinbase Bundle offers a market-weighted selection of the five cryptocurrencies available to buy and sell on Coinbase. With Coinbase Bundle, users can buy a bundle of five cryptocurrencies for as little as $25. Ultimately, Coinbase Bundle is aimed at helping the customer form their cryptocurrency portfolio. Coinbase Bundle will also help customers decide on what cryptocurrencies to buy within a certain price.
Coinbase Bundle is a new product we launched earlier this year that lets people buy a basket of five cryptocurrencies with just a few clicks. We talked to Coinbase customers while developing this product, and we often heard that it is really hard to choose which cryptocurrency to invest in first. With that in mind, we wanted to give customers an easy way to get started with a set of five cryptocurrencies, allocated according to market cap. Now customers can start their crypto journey by building a diverse cryptocurrency investment for as little as $25, Emmer told me.”
Once a bundle is purchased, the underlying cryptocurrencies are stored in users’ respective wallets, behaving like separate cryptocurrencies in their Coinbase account. Users can buy, sell, send and receive each cryptocurrency as an individual asset.
San-Francisco based fintech startup, Snowball, is also about to launch what they are referring to as the first “Smart Crypto Investment Automation” (SCIA) platform. Snowball will give users access to portfolio allocations and strategies of SEC-qualified, regulatory-compliant crypto indices with at least $10M assets under management with just a push of a button, and will be among the first of the “Smart Crypto Investment Automation” (SCIA) platforms.
Hunter Harrison, Founding Partner of Konza Capital, believes Snowball is tackling a true pain point for retail investors. “The average retail investor doesn’t have proprietary deal flow or access to advanced trading tools. Passive investment platforms like Snowball’s SCIA will allow them to gain easy and advanced exposure into digital assets,” Harrison said.
Once Snowball is officially launched later this month, users will no longer have to sign up for multiple crypto exchanges, download or purchase different wallets, decide what tokens to buy and sell, and will have their investments working strategically in accordance with market fluctuations.
“The majority of people have no idea how to get started with buying their first Bitcoin, let alone diversifying their crypto portfolio. Snowball allows the everyday investor to participate simply by adding a bank account or credit card, ‘Millionaire Mentor’ and Chief Marketing Officer for Snowball, Jason Stone, told me.”
Retail Investors Focused On Bitcoin
It's also interesting to note that institutional investors entering the crypto market have displayed interest in Bitcoin. A new survey conducted by Wall Street strategy firm, Fundstrat, suggests that once institutional investors are interested in Bitcoin, they become even more bullish than their retail counterparts.
Yet according to Bill Barhydt, Founder of Bitcoin wallet, Abra, Bitcoin will serve as the future cryptocurrency for the entire retail banking system.
I believe Bitcoin is going to be the backbone of the future retail banking system. Consumers will utilize Bitcoin to get investment exposure to myriad assets, do payments and money transfers and even get credit via a global network of banks competing for consumers' business. In all cases, they likely won't even know they're using Bitcoin nor will they have to understand how it works. Much in the same way TCP/IP is the backbone of Netflix and Youtube, while being transparent to the global Internet user base. While institutional investors may provide the short term liquidity in Bitcoin, is likely to be the retail banking system of the future that profits the most, Barhydt told me.”
In order to support this, Abra provides retail investments in different assets using Bitcoin as the backbone of their investing platform. Abra runs a single global platform that enables investment exposure to dozens of different assets all based upon collateralized Bitcoin contracts.
A Little Help Goes A Long Way
Interestingly enough, a recent survey conducted by securities trading platform, SharesPost, gathered responses from 2,490 retail investors and 528 accredited investors. The survey found that nearly three-fourths of retail investors plan to increase their cryptocurrency holdings in the next 12 months. However, it was also the case that current cryptocurrency owners remain highly-bullish on the nascent asset class, expecting mainstream adoption to take longer than they had when asked earlier in the year.
An open financial system depends greatly on people’s ability to understand, explore and choose cryptocurrencies in which to invest. As a result of the consumer solutions from Coinbase and others, the cryptocurrency market could still see increased interest from retail investors moving forward.
