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A plumber who buys a doge shows the power of small investors in crypto

(Bloomberg) – A stone weekend for legions pouring into the crypto all after the direct listing of Coinbase Global Inc. slightly diminished his holding of retailers. Dogecoin collected about 20% on Monday, even after most of the largest tokens, including Bitcoin, fell further. To Mike McGlone, Bloomberg Intelligence’s product strategist, the recent turnaround in the joke token is an example of retail participation in crypto markets. His plumber told him recently that he had bought it. For McGlone, it is the result of the “perfect storm” of locking up the pandemic, a lot of money in the system and the ability of investors to speculate day and night. “Markets will never change – this is only 24 hours a day, seven days a week and it is the easiest to access in history,” he said. It’s a “great example of mere gambling for fun – unless participants lose too much money, especially because they took too many risks at the casino.” one of the basic principles of the market: violent price changes are common. A false report from an anonymous Twitter account that the U.S. Treasury was taking action against cryptocurrency laundering was enough to help Bitcoin fall as much as 15% on Sunday, days after it reached a record $ 64,870. Although the low liquidity of the weekend probably worsened the dive, the largest cryptocurrency in the world fell by an additional 3.5% on Monday. That the wrong tweet can torpedo prices is a reminder that even for all the talk of a growing crypto embrace on Wall Street, individual investors have a lot of heft to throw. This dynamic is particularly prevalent on weekends, when traditional trading tables darken as Bitcoin and other cryptocurrencies continue to change owners. Although Coinbase direct listing marks an important milestone for crypto, for institutions and merchants who dare to crypto, the key first step is to learn to live with that volatility. “It’s more of an introduction for all the people who entered via Bitcoin or the crypto market last week because of Coinbase that the crypto market can be very volatile,” said Philip Gradwell, chief economist at crypto-data tracker Chainalysis. “This is in a sense nothing new if you’ve been in the industry for a few years.” Even by crypto standards, feelings seemed stretched late last week. Bitcoin soared to the lead to the much-anticipated Coinbase list, leading to a one-year gain to over 118% at one point. That enthusiasm spilled over into so-called altcoins like Dogecoin, which has grown by more than 13,000% in the last year. The moves may be inconsistent. Approximately $ 9.3 billion of so-called long-term future positions in Bitcoin were liquidated on Saturday, followed by another $ 700 million on Sunday, according to Bybt.com. Such a drop in Bitcoin was “inevitable” given the degree of foam, Galaxy Digital founder Michael Novogratz tweeted over the weekend, adding that “it will be good in the medium term” as institutions enter the space. Shifting the dynamics of power in favor of institutions will be the “Holy Grail” for Coinbase, last BI analyst Julie Chariell said this week, given that corporations are less likely to drop their stakes as quickly as retailers. Although individual investors accounted for only 36% of the stock market’s volume during the quarter ended Dec. 31, more than 90% of Coinbase’s revenue comes from retail. Whether the cryptocurrency exchange is successful remains to be seen. But even if Bitcoin finds a place in portfolios and on company balance sheets, like MicroStrategy Inc. and Tesla Inc., the weekend is likely to still belong to an individual investor. “The small investor continues to dominate the crypto market,” Steven McClurg, director of technical service at Valkyrie Investments, said in a telephone interview. “When you see such an action over the weekend, that’s when all institutional retailers sleep or don’t work.” For more articles like this, visit us at bloomberg.com Subscribe now to stay in the lead with the most trusted business news. © 2021 Bloomberg LP

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