Bitcoin’s ascent said to be powered mostly by institutional investors

Bitcoin (BTC-USD) has surged 41.2% since the start of 2023 in a sizable rally that seems to be powered mostly by big-money investors, as smaller, less savvy retail investors pull back from the cryptocurrency market that they once dominated, The Wall Street Journal reported Friday.

The token commenced the year at $16.66K compared with the $23.35K print as of early morning trading. But it’s still down some 65% from its November 2021 all-time high given the downfall of the Terra (LUNC-USD) blockchain and subsequent high-profile implosions, including crypto lender Celsius Network (CEL-USD) and crypto exchange FTX (FTT-USD).

In the eyes of Edmond Goh, head of trading for crypto market maker B2C2, institutional investors (e.g., hedge funds) are becoming more active with crypto trading than individual retail investors, as reported by the Journal. He told the newspaper that last year his firm saw over 45% of client trading flows originate from retail versus 34% year-to-date.

Perhaps retail investors’ waning participation in crypto can be attributed to increased lack of trust in the emerging space (following the alleged FTX fraud) in addition to a shortage in regulation. Earlier this week, legend investor Charlie Munger called for the U.S. government to ban crypto like China did in 2021, citing “wretched excess” as a result of a regulation gap.

Ilan Solot, co-head of digital assets at financial services platform Marex Solutions, told the WSJ that some large investors who had shorted bitcoin (BTC-USD) — or wager on lower BTC prices — were now covering those positions in a move that seemingly contributed to the token’s rally.

See why Seeking Alpha contributor Mike Fay believes bitcoin (BTC-USD) “could be heading for another civil war.”