A record number of people are planning to buy cryptocurrencies this year. What does that mean for the price of Bitcoin?
at the price of Bitcoin (BTC 0.99%) With new highs hitting new highs and meme coin mania returning, it's perhaps no surprise that more people than ever are planning to buy cryptocurrencies. According to The Motley Fool Ascent's 2024 Crypto Investor Trends Survey, 43% of respondents say they are “likely” or “very likely” to invest in cryptocurrencies this year, an all-time high. was recorded.
The natural assumption is that with all this new money flowing into cryptocurrencies, the prices of cryptocurrencies will rise further and Bitcoin will continue to hit new all-time highs. But is this really the case? There are two warning signs in the research data that suggest the impact may not be as big as most people think.
Will the new Bitcoin ETF attract new investors?
While the new Spot Bitcoin exchange-traded fund (ETF) has been successful in nearly every important metric, there's one area where it hasn't really made an impact. It's all about attracting new first-time investors into cryptocurrencies. The Motley Fool Ascent's 2024 Crypto Investor Trends Study allows you to categorize data according to people who have owned crypto before and people who have never owned crypto before . And that's where the first warning signs appear.
Yes, people who already own cryptocurrencies are more likely to buy cryptocurrencies this year. But what about those who have never owned a cryptocurrency? Only 3% said they were “very likely” to buy a cryptocurrency, while only 3% said they were “somewhat likely” to buy a cryptocurrency. Only 13% of respondents said that.
This means that over 80% are still “unlikely” to purchase cryptocurrencies this year. Unless Wall Street ramps up its marketing of the new Spot Bitcoin ETF, it may never be able to attract these investors, as all the questions and issues surrounding the cryptocurrency remain in the air.
Virtual currency demographic gap
Additionally, cryptocurrencies seem to be struggling to expand their demographic profile. Simply put, young men are the ones who are more likely to buy. There is a reason why the stereotype of “cryptocurrency friends” persists.
In contrast, older investors and women tend to be more skeptical about purchasing cryptocurrencies. As The Motley Fool Ascent's 2024 Crypto Investor Trends Study points out, “cryptocurrencies have not expanded beyond young men.” And that data is backed up by other studies like Pew and Morning Consult.
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One way to interpret the survey data is that Bitcoin does a great job of “activating the base,” but it does a not-so-great job of appealing to older investors and women. In other words, the same people who are already invested in cryptocurrencies are getting more excited about investing in cryptocurrencies, but for others, the new enthusiasm surrounding Bitcoin is not having a significant impact on their investment decisions. not. If so, the upward momentum in cryptocurrency prices may not be as strong as expected.
Will institutional investors be able to regain some slack?
If you're hoping for a rise in crypto prices this year, all is not lost. That's because institutional investors, rather than individual investors, appear to be driving the recent momentum around cryptocurrencies. And it's not because they're more passionate about crypto than the average investor or know more about it than the average investor.
The bottom line is that they have more money to work with, and even raising the Bitcoin allocation from 0% to 1% can have a huge impact on the amount of money flowing into Bitcoin. be. In the first three months alone, the new Spot Bitcoin ETF had over $30 billion in assets under management.
Additionally, we are still in the early stages of understanding how changes in institutional allocations will impact Bitcoin's price. According to some crypto experts, “3% is the new 1%.” Therefore, an investor who allocates only 1% of his portfolio to Bitcoin may decide to increase that allocation to his 3%.
Some, like Ark Invest's Cathie Wood, think the optimal allocation mix for Bitcoin should be much higher than 5%. Therefore, over time, the influx of institutional money into Bitcoin should increase, pushing the price higher.
Impact on Bitcoin
New research data suggests more investors than ever before may decide to add cryptocurrencies to their portfolios this year, but Bitcoin still has a long way to go before it becomes mainstream there is. After all, it's hard to call Bitcoin “mainstream” when older generations are still skeptical about it and the main buyers are mainly young men.
Wall Street needs to do a better job of explaining Bitcoin to the vast investor base that doesn't understand why they should invest in cryptocurrencies. Bitcoin could rise even higher this year, but to reach its full potential it needs to find a way to attract first-time crypto investors.
