Retail investors are increasingly participating in the development of the crypto industry, driven by the popularization of meme tokens and the tokenization of real-world assets (RWA). This perspective was shared by Coin Terminal founder Khatu Sheikh.
These trends are “diluting” institutional dominance and creating accessible opportunities for a broader range of participants.
The Retail-Institutional Gap
The opportunities in the crypto market are often available only to wealthy investors and venture funds, who acquire assets at early stages.
Retail investors, entering the game later, face high risks and limited returns.
Research by Glassnode indicates that the activity of small bitcoin wallet holders has nearly halved since the end of 2024. Sheikh confirmed these findings, noting that retail interest has reached a three-year low.
One way to gauge $BTC retail investor activity is by tracking the Spent Volume of wallets holding less than 0.1 BTC: https://t.co/UryTbgwzP0
At its peak in Nov 2024, retail investors were spending $20.6M per hour. Today, that figure has dropped to $10.7M per hour — a ~48%… pic.twitter.com/vws6i1eAgB
— glassnode (@glassnode) January 30, 2025
Institutional investors like Metaplanet and Strategy have increased their crypto reserves, taking advantage of the decline in the price of the leading cryptocurrency.
Bitwise CIO Matt Hougan described the gap between retail and professional sentiment as “absolute.”
There is an absolutely massive disconnect between retail and professional sentiment in crypto right now. Retail sentiment is the worst it’s been in years, while professional investors are extraordinarily bullish. It’s like living in two completely separate worlds.
— Matt Hougan (@Matt_Hougan) February 7, 2025
According to him, retail investors maintain bearish positions, while professionals are bullish.
Is the Situation Changing?
Despite existing market constraints, the crypto industry offers innovative products such as RWA and meme coins, opening new opportunities for retail investors.
These tools help lower entry barriers for newcomers to the industry. According to RWA.xyz, the asset tokenization market has exceeded $19 billion. This has provided retail investors access to fractional ownership of RWA and ensured liquidity.
“Funny coins” also play a significant role in bringing back retail capital. They use speculative mechanisms to make investments simpler and more entertaining.
Research by NFT Evening shows that about 42% of those investing in meme coins are new market participants. The survey was conducted following the launch of a coin associated with U.S. President Donald Trump.
In conclusion, Sheikh noted that diversified investment options and innovative products have provided retail users access to the crypto market.
Back in December 2024, CryptoQuant experts highlighted retail investors’ belief in the continuation of the bull run.