Retail investors have grown increasingly savvy. The best way to reveal it is to compare their behavior during past bull runs. Retail investors were the primary drivers of market growth then.

Many traders entered the crypto market during the pandemic lockdowns of 2021 and 2022. Users had plenty of free time then, so they enthusiastically dove into the cryptocurrency space.

However, the market crisis of 2023 cooled much of that excitement. The number of investors has decreased significantly, but those who stayed have honed their skills. They learned to better predict entry and exit points with a high degree of accuracy, resulting in more profitable trades.

Coinbase’s chief analyst James van Straten came to these conclusions after studying market data. The analyst categorized retail investors depending on the amount of their BTC. Then he tracked their behavior during different phases of market cycles.

The study revealed that retail investors were the key drivers of the market during the 2021 bull run. Will it be the same in the current cycle? Considering that fewer retail investors remain, and institutional players now leading the market, this won’t happen. Retail investors now hold 15% of all Bitcoin, about 3 million BTC.

Despite this, the retail investors that stayed have adopted a "smart money" strategy.

The crises after the collapse of FTX and Luna played a big role. If previously investors bought at lows and sold at highs, many now focus on accumulating bitcoin. They follow long-term investment strategies and behave like professionals even at periods of correction. It results in fewer liquidations in the market.