By Ben Marks, CEO and Founder, Blocktrade Capital
As we all know by now, Consensus did not cause the crypto price increases that people expected. Some people think this is due to a lack of enthusiasm from the crypto community, but it is actually because the conference catered almost exclusively to institutional investors. Let’s remember that isn’t a bad thing, as institutional investors are the gateway to trillions of dollars of capital waiting to enter the crypto space. $6 trillion in pension fund money, $6 trillion in private wealth management money, $3 trillion in mainstream hedge fund money… we’ve all heard the stats by now. As to when many of these institutional investors will finally enter the market is anybody’s guess, but there’s no denying their interest in the space, as evidenced by the 8,000-person turnout for Consensus last week in New York City.
Retail investors, on the other hand, were largely absent from Consensus. Why is that? Because tickets cost $2,000 a piece, and $3,000 if you purchased them at the door. That is not affordable for the average mid-20’s crypto investor who puts a couple hundred dollars into a few of his favorite coins. Retail investors are the ones that drive the market, not institutional investors. To understand why, it’s important to first understand the different mindsets that the two groups have when it comes to investing.
Firstly, institutional investors are more prudent with their investment choices. They do tons of research and due diligence before jumping into an investment. Retail investors, on the other hand, are more likely to invest based off emotion. Specifically, excitement. A high-energy conference that gets retail investors pumped about new coins and all the money that can be made investing in crypto? That’s absolutely going to cause an increase in prices, as retail investors typically rush home to buy the new coins they learned about at the conference. The Crypto Invest Summit in Los Angeles the week before Consensus is an example of this, as Bitcoin rose from around $9,200 to $9,900 in the days following the event. Tickets for the two-day event cost about a third of what Consensus tickets cost, and the conference was geared towards investing in crypto, not blockchain technology in general. But Consensus didn’t cater to retail investors, and the lack of a market increase in the days following the event is evidence of this. Instead, the value of Consensus is more likely to be felt in the 6-12 months after the conference, when projects from institutional investors that were spawned during conference meetings finally begin to take shape.
So, what will it take to get the market back up?
The retail market needs to be stimulated, but the question is how? First off, we need to figure out where these retail investors are going to get their crypto fix. As mentioned above, conferences geared more towards investing, tokens, and ICOs generally attract the retail investors. Meetups are another popular stomping ground for newer investors and developers to get involved in the space. This way, people meet each other and discuss new coins, share investing tips, and just generally get each other excited about the market. Forums like Reddit, BitcoinTalk, and Telegram are where retail investors do their research online. This online space can also be a source of fervor for the markets. We need to see increased stimulation across all of these channels, the way there was during the bull run of December 2017. It is important for prominent cryptocurrency experts to go to meetups and post on digital forums in order to engage with smaller investors. Another way to excite the market is for exchanges to continue to add new coins, as this will initiate conversation. All of this will serve to excite retail investors, which in turn will increasing trading activity, and raise prices. Prices similar to what we saw in December 2017 might be what’s needed for institutional investors to start pulling the trigger.