Long before Robinhood, Binance, Etoro, and other user-friendly trading apps were spreading like a virus across social networks, individual investors — also known as retail traders — represented a small yet powerful group of influence on the world’s financial markets.
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That crowd was from a generation that went to Reddit and blogs to get their research and data on companies, commodities, and instruments to put their money in. Think of a suburban, middle-aged, greying, nerdy early retiree shopping for a movie DVD rental at a blockbuster in Calabasas or upstate New York.
Those individual investors would sometimes come in the form of family offices and small mutual funds set up by smart and moderately rich people who bought their tickets out of the rat race and now live peacefully and quietly. Yet those traders had a keen interest in making money out of the financial markets and investing in stocks over real estate or business.
Those traders would have an average account size of $200,000 to $2 million and invest in low to medium-risk names, holding them for years, sometimes to benefit from dividends. Their trading style was as peaceful and quite as the landscaped neighborhoods they live in.
Enter millennials! A hyped-up, live-hard, live-loud generation that was handed down some of the wealth of the grandfathers of the world mentioned above. This transfer of wealth had an astonishing effect powered by high leverage and energy drinks. This is a generation that gets its data and research through Twitter and live streams, found a few chunks of it, and headed to the financial market with their small amount of wealth.
Having headed business development and marketing teams at two retail brokers over the past 10 years, I can tell you a retail trader is now between the ages of 19 and 35, with an average account size of $20,000–$100,000. They execute over six deals or trades a week and they average a hold time on the deal of under 10 calendar days.
The change is monumental and the trading behavior is even greater, with this new form of customer segment preferring high-risk, high-reward trades during times of global lockdowns and pandemic; a resigned generation that chooses humor and irony wins above all.
This fundamental change in the structure of an entire market segment in the financial world, which is in essence is the money market of the world, and is most likely one to be with permanent effect. I would dare declare it a new world order for the money world — one where Bitcoin replaced gold as the escape safety heaven!
In the past decade years Bitcoin, a merely 20-year-old commodity out performed gold in a very interesting way. It seemed that as fears amass around the world from war or pandemics, as the financial markets run wild from fear, and entire countries’ economies go bust, Bitcoin was the run-away escape capsule every body dumped their money into.
This applies to everyone with money out there. I’m talking about banks, individuals, institutions, and even countries. The demand was massive. A shut-up-and-take-my-money attitude overtook the market including that of the gold! People dumped their gold for Bitcoin. Bitcoin has been in higher demand per capita over the past 10 years than gold and silver have been combined. (As a side note, the February report by the World Gold Council stated that Bitcoin has been four and half times more volatile than gold over the past two years.)
I remember in 2015 and the few good years that followed when hot initial coin offerings were centered on things like GSM accessible blockchain to support inclusion in Africa, proof of location blockchain solutions, and wilder innovative ideas that were discussed at nerdy enthusiast conferences.
Now Blockchain conferences are no longer exciting or wild. They are just a bunch of a different crowd drinking cider way too early at the company’s expense, the crowd changed from young and serious to middle aged and over excited for something they just don’t fully understand. With the advent of corporate investors such as Elon Musk, the Bitcoin market is no longer the realm of the technologists and millennials that favored it 10 years ago.
Did the retail trader segment really change or did the two generations of retail traders just switch places?
Did Bitcoin just turn into gold by world order or is it natural order?
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