Cryptocurrency is taking over Reddit threads, and meme stocks are going to the back burner, according to figures from market data firm Quiver Quantitative.
The data, shared with Insider, found comment volumes on the r/CryptoCurrency subreddit jumped 82% this month, while the number of comments on r/WallStreetBets sunk 25%.
In further contrast, on Friday the cryptocurrency forum had about 36,000 daily comments, while Wall Street Bets had just 13,000.
Cryptocurrencies went on a wild ride last week as a multi-day selloff caused the price of ether and bitcoin to plummet, along with altcoins such as Dogecoin. The selloff stretched into the weekend, but on Monday and Tuesday, the price of bitcoin began to recover.
The number of comments in r/CryptoCurrency hit the highest point in the month last week with 59,000 in just one day.
Though Wall Street Bets came into the spotlight earlier this year amid the GameStop frenzy and ballooned to more than 10 million followers, the forum forbids users from discussing cryptocurrency. The guidelines say, “No Pump & Dump, Crypto Discussions, Schemes or Scams.”
The cryptocurrency thread, however, says it’s the “leading community” for discussion, news, and analysis on the topic, with nearly 3 million members.
Retail traders, known to flock to Reddit to discuss markets, want to invest “in a narrative,” Quiver Quantitative founder James Kardatzke told the Financial Times, adding that, “crypto is having a lot of volatility and more interesting storylines,” than meme stocks like GameStop and AMC Entertainment, currently.
In a May 24 note, JPMorgan analysts said “more financially vulnerable demographic groups,” like millennials and younger, “have larger relative exposure” to the crypto market. The analysts cited a statistic from 2019 which showed the group owned about a third of the $1.6 trillion market at the time.
An April survey of 1,400 investors aged 18 to 40 from the Motley Fool found 47% of Gen Zers and 39% of millennials own cryptocurrency, making it the third most popular type of investment after stocks and mutual funds.
The recent cryptocurrency sell-off that saw bitcoin fall over 50% from its highs looks a lot like the collapse at the end of crypto’s previous bull cycle, JPMorgan’s head of interest-rate derivatives strategy said.
In a Monday note, Josh Younger said that although the recent run-up in the total cryptocurrency market capitalization was more gradual than the 2017-2018 cycle, the unwind bears some resemblance to the collapse.
The pace and magnitude of the unwind looks “eerily similar” to the previous cycle, he said. And just like in 2017, investors have begun to diversify away from bitcoin and ethereum and into stablecoins and altcoins. As the crypto frenzy continues, investors buy riskier and riskier assets.
This risky pivoting combined with negative momentum signals and institutional outflows “should caution any view that the worst is clearly behind us,” Younger warned.
However, he also acknowledged there are a number of differences between the two cycles. This time around, the market hasn’t seen the frothiness that stemmed from the frenzy of ICO’s (initial coin offerings.)
Also, there’s been more institutional sponsorship in this current cycle, continued development and maturation of market infrastructure, broader and cheaper availability of leverage, and the rise of DeFi projects, Younger said.
The strategist concludes that crypto is in the middle of a “sizeable correction,” and it’s too early to call the bottom, but the resilience of the crypto market structure is a “positive technical backdrop” for a recovery.
“We continue to see evidence of resilient microstructure in cryptocurrency markets: the volatility spike appears somewhat regionally localized, market depth is down but has not cratered despite these moves, and derivatives pricing has managed to adjust quickly enough to retain a decent fraction of the levered long base,” Younger said. “This all argues against the view that we are in the midst self-reinforcing vicious cycle of price declines-a classic run scenario.”
One millennial investor vowed to “never again” miss out on gains from hyped-up cryptocurrencies. One $500 investment later, he’s now the proud owner of 20 billion units of Australian Safe Shepherd, also known as ASS coin, Bloomberg reported.
The article described him as a “thrill-seeking amateur, goaded on by social media.” Social media platforms have become a key part of the boom in retail trading, as a recent survey showed one in five investors has used Reddit to help them make an investment decision.
Hackney, a former bar tender from Tampa, Florida, said he was part of the GameStop craze earlier this year in which an army of Reddit retail traders caused the stock to skyrocket, squeezing short sellers. As for his investment in the stock, he told Bloomberg he “was up and then, in a blink, he wasn’t.”
He invested in dogecoin, at one point, too. Dogecoin, which twisted and turned this past week amid broader market volatility, started as a social media joke about a popular meme and has since turned into a well-known altcoin.
In January, Hackney bought dogecoin at 4 cents, and the currency immediately doubled. But he couldn’t stand the wild price swings and sold his position, only to see it rocket to 70 cents earlier this month.
At that point, he vowed to never let that happen to him again, Bloomberg wrote. That’s when he put $500 into ASS coin.
Altcoins have taken hold of retail investors recently. Instead of the well-known bitcoin, many are investing in alternatives like dogecoin, litecoin, and safemoon, among others.
Earlier this week, Barstool sports founder Dave Portnoy, calling the alternatives “sh*tcoins,” invested $40,000 in Safemoon, which launched in March.
Cryptocurrency linked-stocks plummeted this week amid massive sell-offs in bitcoin and ethereum. Analysts have warned against investing in alternative cryptocurrencies, though, saying the social-media driven coins are unregulated and highly volatile.
Billionaire investor Chris Sacca owns a bunch of cryptocurrencies including bitcoin and ether, and sees their environmental costs as a problem that could spark creative solutions.
“I own a broad basket ranging from early BTC/ETH to shitcoin lottery tickets,” he tweeted on Saturday. “The climate impact bums me out,” he continued. “But that is the market impetus for a lot of clean energy innovation.”
Sacca, the founder of Lowercase Capital, was an early investor in Uber, Twitter, and Instagram. He shifted his focus from venture capital to tackling the climate crisis, voter suppression, and other issues in early 2017.
The billionaire’s latest comments were prompted by Mark Cuban, his former “Shark Tank” colleague and a champion of dogecoin, tweeting that he always asks himself what coins can be used for.
Sacca was an early investor in bitcoin, and has been bullish on its prospects for years. “Bought bitcoin at $800,” he said in March 2014. The cryptocurrency now trades north of $40,000.
He predicted it would become “institutionally mainstream” in 2017. However, he described it as an “environmental disaster” in 2013 and again in 2017.
The surging energy costs of bitcoin mining are a hot-button issue in the crypto space. Tesla CEO Elon Musk reignited the debate last week when he said his electric-car company would no longer accept bitcoin for vehicle purchases, citing environmental reasons.
“I strongly believe in crypto, but it can’t drive a massive increase in fossil fuel use, especially coal,” he said.
Cryptocurrencies are all the rage right now, thanks to the likes of Tesla boss Elon Musk hyping up dogecoin, or some of the world’s most respected financial institutions making bitcoin available to their clients, right down to youngsters on social media snapping up digital coins for pennies and then paying for college.
The value of most digital tokens has gone through the roof. Search volumes for “crypto” on Google outpace those for “stocks” by a ratio of 5 to 1 right now. Everyone wants in and to “HODL” – slang in the crypto community for “hold on for dear life”, or hang on to your bitcoin, no matter how crazy the price goes.
And at the very forefront of the charge into crypto are millennial investors. In the US alone, two out of three millennials say they believe it’s becoming a more attractive asset class. And why not? To many, it looks like quick, easy money and it’s the polar opposite of their parents’ definition of “finance.”
More time to secure returns, low-effort investing, the novelty value, detaching from traditional financial systems and the temptation of high rewards are some of the reasons some of the young investors we spoke to gave as to why they love cryptocurrencies.
Mastercard’s New Payment Index showed earlier this month 40% of those surveyed said they would use crypto in the next 12 months. Specifically though, 67% of millennials said crypto had become a more attractive investment option since its boom began, and 75% of this age group said they wanted to learn more about the asset class.
Millennials are largely understood to be people born between 1980 and 1994, many of whom are gradually inheriting their baby-boomer parents’ wealth and pretty much all of whom have grown up in the digital age.
“After many half-drunk conversations with [a friend], we finally saw “the light” that was DeFi… The idea of being an early adopter, even with all the hype, was a little scary but also very exciting.” Jon Amar, CEO of public relations technology startup Vetted, told Insider in an interview.
But it was not just the novelty that attracted Amar into the crypto-sphere. “I can’t go to a store and buy a good or service with gold. I can, however, do that in certain places with crypto. This was a big determining factor for me, as it legitimized crypto as a viable alternative asset.” he said.
Melissa Lewis, a young investor who uses Binance to trade cryptocurrencies told Insider one of the reasons she likes crypto investing is its ease. “With crypto, you can buy it and forget about it for a couple days and then when I check it, it’s increased,” Lewis told Insider.
“Crypto has had a steady and stable increase, whereas my stocks are constantly going up and down,” she continued.
Others echoed this sentiment: “I also see a more visible path to making profits in this market versus the equity and bond market,” investor Mitchell Yousem said.
This long-term nature of crypto investments is one of the main reasons why millennials are the driving force behind the boom, rather than older investors, eToro crypto market analyst Simon Peters told Insider.
“With millennial investors compared to the older generation, time is on our side and we can afford to hold these investments for 20, 30, 40 years in certain cases and see what happens, where older generations don’t have the luxury of time,” he said.
But Peters also believes many are first tempted by the thrill that crypto’s volatility brings.
And these tokens are certainly volatile. The most widely traded, bitcoin, has risen by 78% so far this year alone, having hit record highs around $64,000 just one month ago. But this pales in comparison with the price action in some of the alternative tokens. Meme crypto dogecoin has gained 12,000% this year, while Cardano’s ADA token has risen almost 1,000%. But even that seems small fry compared with tiny, hyper-volatile tokens that can gain 1,000% in 24 hours.
“Whilst people may have gotten in initially purely because of the volatility and the price action, once they’ve actually gone and actually understood the technology, what it’s about, what crypto’s trying to do essentially that’s when more of an interest may develop as well, eToro’s Peters said.
It’s not just about convenience and money. Crypto, unlike traditional investment approaches, offers transparency Yousem said.
“I think many of the younger generation have a great deal of skepticism towards banking institutions, and investing in and choosing to use alternative forms of currency is one way to vocalize this view,” he said.
Based on Peter’s experiences at online broker eToro, he believes this plays a role on top of the money-making potential. “I think with the younger generation as well there’s perhaps over time been a bit of a disengagement with governments and central authorities and the whole, I suppose, ethos of crypto is to be decentralized.”
Investing in cryptocurrencies has been synonymous with investing in bitcoin, especially for those new to the digital asset space. Bitcoin, after all, is often regarded as the first modern cryptocurrency, founded by an anonymous developer under the pseudonym Satoshi Nakamoto in 2009.
“We think bitcoin had the first-mover advantage,” Ian Balina told Insider. Balina is the founder and CEO of Token Metrics, a data-driven investment research platform for cryptocurrencies.
Ether comes in at a close second. The global and open-source platform for decentralized applications that runs on the ethereum blockchain, is the runner-up to bitcoin with a valuation of $318 billion. Many analysts predict it will surpass the king of cryptocurrencies down the road, citing ether’s ability in storing computer codes that power contracts and applications.
Beyond these two, there is a wealth of crypto assets in the nascent space all with different utilities.
“We’re thrilled about the growing adoption of crypto beyond bitcoin,” Greg King, CEO of Osprey Funds, a crypto asset manager that launched Osprey Bitcoin Trust, told Insider. “Investor and market appetite continues to grow for funds providing access to some of the most exciting coins and tokens.”
While cryptocurrencies are difficult to separate into neat and comparable categories, London-based fintech entrepreneur Viktor Prokopenya said the underlying popularity metrics can be borrowed from more traditional asset analysis. He named market capitalization, price volatility, and momentum as examples.
“I believe we will see an increasing disregard for traditional portfolio theory and a reduction in diversification by many retail investors,” he told Insider. “Of course, this could work out for the better but conventional prudence is advised.”
Insider, with the help of experts, lists here the five most common types of crypto uses with 15 examples of coins from across the space.
A stablecoin is a type of cryptocurrency that is backed by a reserve, which could be a cryptocurrency, a fiat currency, or a commodity. For instance, tether is pegged to the US dollar. USD coin-created by Coinbase and Circle-and dai are also both pegged to the American currency.
3. Proof of Stake
This is a mechanism that regulates the process of transactions between users, ensuring that these are verified and added to a blockchain’s public ledger. PoS was born out of another popular algorithm, Proof of Work. Both have the same goal of reaching consensus in the blockchain, Binance Academy explained, and only differ in the process.
Examples of cryptocurrencies that use PoS are ether (decentralized applications), cardano (academic research), and solana (blockchain applications).
Also known as DeFi, this is an umbrella term for various applications that use public blockchains and crypto assets to disrupt the traditional financial sectors. DeFi is an alternative to a system that is tightly controlled and held together by decades-old infrastructure, according to a website funded by the Ethereum Foundation.
DeFi, an industry now worth over $66 billion, is a major reason for ether’s recent record-breaking week during the end of April.
Other cryptocurrencies that use DeFi applications according to Balina are: uniswap, a decentralized exchange for trading ethereum-based tokens via an automated order book; chainlink, a decentralized oracles network for bringing off-chain data onto the blockchain; and aave, a decentralized lending platform.
“In the last few years, we have seen DeFi also take up a significant spot within any listing category,” Ben Weiss, CEO of bitcoin ATM operator CoinFlip, told Insider – adding that many factors remain to be seen after the London upgrade in June.
Weiss continued: “I would expect the DeFi space to grow as the momentum of both DeFi usage as well as innovation is growing in the billions of dollars every other day. Decentralized market makers like uniswap and pancakeswap changed what it means to be liquid and crypto accessibility in general.”
5 . Non-Fungible Tokens
NFTs are unique digital assets secured on a blockchain supported by ethereum. Each NFT has its own signature, which can be verified in the public ledger and cannot be duplicated. When people buy NFTs, they gain the rights to the unique token on the blockchain, and not the artworks, collectibles, or tweets linked to the NFTs themselves.
Many of these are built on ether, Osprey said, but flow, tezos, and algorand also support NFTs.
“The potential applications of NFT technology are virtually endless,” he added. Other examples are theta network (video streaming blockchain) and chiliz (sports industry).
Altcoins associated with crypto whiz Sam Bankman-Fried, the head Alameda Research and the FTX derivatives exchange, are surging in popularity, according to data from CoinMarketCap.com.
Bankman-Fried’s Solana has jumped over 35% in the past week moving it to the 14th spot in CoinMarketCap’s list of the top cryptocurrencies worldwide. The altcoin now has a market cap of over $12.4 billion.
Serum, a cryptocurrency used by Bankman-Fried’s decentralized derivatives exchange is also up more than 40% in the past week, hitting a market cap of $468 million.
Finally, the price for FTX coin, which is used on Bankman-Fried’s FTX derivatives exchange, has jumped over 40% in the past month to hit a $4.9 billion market cap.
Bankman-Fried started Alameda Research in 2017 after a three-year stint at the quantitative-trading firm Jane Street Capital. Since then he has established himself as a top trader in the crypto space.
The 29-year-old is now one of only a few self-made cryptocurrency billionaires, according to data from Forbes.
Bankman-Fried told Bloomberg that he believes the rally in his solana cryptocurrency is “partially a delayed reaction to the work that’s been put into the ecosystem over the last year, and the need to find scalable solutions for DeFi as the ecosystem grows.”
DeFi or decentralized finance refers to blockchain-based trading and lending platforms that are automated by software.
DeFi applications continue to disrupt the finance industry. If you want to learn more, check out Insider’s recent breakdown of the Defi phenomenon and the 10 largest assets in the space.
As bitcoin cements itself center stage as the world’s most popular cryptocurrency, flanked by the likes of ethereum and dogecoin, there’s a group of alternative coins rising on the periphery out of mainstream focus: avalanche, cardano, polkadot, cosmos, and the graph.
They’re all newer, more volatile, and smaller by market capitalization – and also offer higher possible returns, said Tally Greenberg, head of business development at Allnodes, a staking and hosting platform for cryptocurrency investors.
“Altcoins are good for diversity in your investment portfolio,” she said. “They are different from commodities and stocks. Therefore, they do not correlate with other traditional investment assets.”
Greenberg added that investors can get higher returns with altcoins, and can also earn some passive income through staking, a method where an investor holds or locks her cryptocurrencies to receive rewards. But the most compelling reason for Greenberg to invest in altcoins is the unique blockchain infrastructure that accompanies them, which she says offers immense future upside.
Antoni Trenchev, co-founder and managing partner of Nexo – a financial institution for digital assets – agreed that altcoins are slated for significant rallies this year.
“More and more alt-coins are getting on traders’ radars,” he said. “They are also putting ethereum under pressure as the top [decentralized finance] dog is becoming heavily congested due to the influx of users, developers, [decentralized application], DeFi protocols, and the [non-fungible token] craze.”
Harold Montgomery, managing director at digital payments platform Wirex, believes in the future of altcoins as well.
“These new currency systems will overcome the scalability and transaction speed limitations of bitcoin and ethereum which currently hinder their usefulness,” Montgomery said. “They will support billions of transactions, sometimes of very small size, enabling global commerce.”
Yet for some, including Mike Venuto, co-portfolio manager of a $1 billion ETF that focuses on blockchain technologies and companies dealing with cryptocurrencies, altcoins are still nascent.
“I think they are interesting ideas, but too early,” he said. “Many of these altcoins have great concepts but the protocols to support them need more adoption before they can succeed.”
Venuto added that even bitcoin is still in the process of establishing its own infrastructure. The same goes with ethereum.
Pankaj Balani, CEO at Delta Exchange, a digital asset derivatives exchange, shares the same skepticism, although is slightly more bullish when it comes to polkadot and cardano.
“We have seen bitcoin gain close to six times on the back of institutional participation,” Balani said. “The trend has however not been the same for altcoins. Though in some cases the absolute returns might be higher most of the coins have started to move only in January.”
Still, the rise of altcoins is drawing some attention for a couple of reasons. Insider gives you a look at five altcoins that are gaining traction:
Avalanche is a new blockchain that can process more transactions than ethereum at a much faster rate but at a lower cost. Greenberg said sees it as “a promising technology that does more for less.” For instance, if ethereum can support 30 transactions per second, avalanche can do the same for 4,300.
Why is it important? Greenberg points to the rise of new services such as decentralized finance or DeFi, and to the existing infrastructure for such projects.
Cardano is also a new blockchain that positions itself as a positive global change, especially with its goal of providing access to financial services in developing countries. Greenberg also said it is more energy-efficient than bitcoin.
Why is it important? For Greenberg, investing in Cardano is for those who believe in its philosophy and approach. Further, the blockchain, she said, regularly updates and “seems to be on track in meeting their projections, which underlines consistency in the blockchain’s overall health.”
Polkadot is a Swiss blockchain born in the midst of a global pandemic. Jeffery Wang, head of Americas at The Amber Group, a cryptocurrency company, referred to it as “one of the most highly anticipated next-gen blockchains” as it enables developers to build their own blockchains and connect them with each other.
Among other reasons, Wang said Polkadot overcomes the scalability issues that are present in Ethereum. Greenberg and Wang noted that Polkadot is meant to complement Ethereum, not compete with it.
Why is it important? It is a new but promising technology that many dApps developers seem to be keen on, Greenberg said. She also added that the ability to communicate with many blockchains is crucial and encourages investing in polkadot if one believes in the future of decentralized applications.
Similar to Polkadot, Cosmos is an ecosystem of blockchain that offers interoperability, allowing an exchange of data between different blockchains. The blockchain of cosmos, however, Wang said, is independent and has its own consensus mechanism and validators to secure itself, unlike polkadot and ethereum.
Why is it important? Wang said investors who put money in cosmos are those that are looking for a solution “to help the entire blockchain sector advance by bringing different projects together,” not necessarily those who are looking to find a “winning blockchain-takes all scenario.”
5. The Graph
The Graph, only a few months old, is a decentralized and open-source indexing protocol for blockchain data, Wang explained. It is not as established just yet, but is called the “Google of Blockchains” by its advocates since the platform can be utilized to search for any data through simple queries.
Why is it important? – While it has little to show, for now, Greenberg and Wang believe that there is huge potential with the graph, particularly with how it can be used to index all blockchains and decentralized applications. The graph’s technology, Greenberg added, is already in use by Uniswap, which is a decentralized exchange.
Bitcoin fell on Wednesday, heading for its largest weekly fall since late August, as a combination of a stronger dollar and a bout of profit-taking swept $172 billion in value from the cryptocurrency market since the start of the week, leaving the price at a pivotal point on the charts.
Rival coins such as Ethereum and Ripple Labs’ XRP, along with smaller alt-coins Litecoin and Cardano, sagged after several days of heightened volatility.
Trade in cryptocurrencies has been booming for the last five months in particular. Bitcoin has risen by 230% in that time, hitting a record above $41,000 on January 8, while Ethereum has gained 217%, prompting a number of prominent investors to warn about the dangers of speculative bubbles.
Shark Tank star investor Mark Cuban on Tuesday compared the crypto trade to the dot-com bubble of the 1990s in a series of tweets, and like the crash that ensued in early 2000, said any bursting would see some coins survive, and others fail.
“The cryptocurrency market has come under fire in recent days, with Bitcoin and Ethereum both sinking lower as a wave of risk aversion sweeps across global financial markets. Although the longer-term outlook for both cryptocurrencies remains skewed to the topside, further losses look likely in the coming days,” DailyFX strategist Daniel Moss said in a note.
Bitcoin was last trading around $34,580, up around 1.65% on the day on the Coinbase exchange.
With the retreat to $35,000, the Bitcoin price is hovering around key technical levels on the charts, and a break above, or below, those levels could pave the way for the next burst towards record highs, or a more protracted decline, analysts said.
“Failing to gain a firm foothold above last week’s close ($38,200) would probably open the door for sellers to drive prices back towards psychological support at $30,000. Clearing that may pave the way for a push back towards former resistance-turned-support at the 2017 high ($19,891), Moss said.
Bitcoin is still a full 95% above where it was a month ago, but the technical charts show that this latest retracement in price this week has brought a number of support levels – a level at which the price should hold in the event of a more aggressive sell-off – into play.
The Bitcoin price is nearing a key Fibonacci retracement level. Fibonacci retracements are a series of horizontal lines on a chart that show where support and resistance are likely to emerge based on an asset price’s recent highs and lows and a breach of a key line can often trigger a swift move higher, or lower.
Chris Svorcik, a technical analyst who writes for FXEmpire, said Bitcoin needed to stay above $29,762, which is the half-way point between the low of December 11 and the high on January 12, or 50% retracement, to avoid a drop towards $26,000.
“As long as price stays above the 50-61.8% Fibonacci support zone, an uptrend has the best chance of continuing higher (blue arrow) for new high. Only a break below the deep Fibonacci levels would change and invalidate that view,” he said.
Ethereum, which on Wednesday was trading up 2.8% on the day around $1,079 on the Kraken exchange, also finds itself at a tipping point on the technical charts. The price rattled to a three-year high at $1,350 late on Sunday, but its decline since then means it has now surrendered over half of the gains made since the start of 2021, leaving it hovering at a key Fibonacci retracement level.
“Ethereum would need to move through the 23.6% FIB and the pivot level at $1,069 to support a run at the first major resistance level at $1,131,” Bob Mason, a technical analyst who writes for FXEmpire, said.
“Support from the broader market would be needed, however, for Ethereum to break back through to $1,100 levels,” he said, adding: “In the event of an extended crypto rally, Ethereum could test resistance at $1,250 before any pullback. The second major resistance level sits at $1,212.”