Crypto is ‘so back’ for everyone—except retail investors

The recent rally in crypto prices, which has seen Bitcoin soar back above $40,000, has led many on social media to declare “we are so back.” They’re not wrong. Not only is Bitcoin shaping up to be the best performing asset of 2023, it has also attracted the support of Wall Street giants like BlackRock that are lining up to bring crypto into the financial mainstream. Meanwhile, we’re also hearing cringey slogans from the bubble era like “WAGMI” and “to the moon” for the first time in a while.

This evidence all suggests the prolonged Crypto Winter is really and truly over—but for one thing. As The Block and others have pointed out, one key element of past bull markets is conspicuously missing: app downloads.

In the boom years of 2017 and 2021, consumer crypto apps tore up the rankings of Apple’s App Store as consumers rushed to get a piece of the action. In fact, Coinbase soared all the way to No. 1 on the charts. This time around? Coinbase has ridden the surge in Bitcoin price all the way to…No. 318 overall and No. 21 among consumer finance apps, by one account. Yawn.

The question is what to make of this. Optimists will tell you that consumer interest—as reflected in app downloads—is a lagging indicator and that, as the crypto market heats up further, newbies will pour in and ignite the biggest boom cycle yet. I’m not convinced. An equally plausible explanation for the absence of retail customers this cycle is that people have been reading the news the last 18 months, and decided they want nothing to do with something whose most famous ambassador is Sam Bankman-Fried.

A more neutral explanation is that a large percentage of younger people, who are far more likely to own crypto than their parents, already have wallets from the last bull cycle. If this is the case, the likes of Coinbase are fishing for a dwindling pool of new customers who are just discovering the world of crypto for the first time—but who aren’t numerous enough to really move the needle on app downloads.

If this is the case, Coinbase and others must persuade legions of one-time customers—many of whom got badly hosed in the last cycle—to jump bank into crypto. If that doesn’t happen, crypto prices may climb all the same thanks to the Wall Street crowd, but the upswing won’t be as dramatic or as colorful as in the past. That’s a good thing if it means fewer gullible investors will set their money on fire buying Floki dog tokens or whatever, but it will also undercut claims by crypto boosters that digital assets are going mainstream.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

The price of Bitcoin has steadied around $42,000 after last weekend's wild volatility. (Bloomberg)

Binance's market share has dropped to around 30% in December, though trading volume on the platform has picked up. (CoinDesk)

The lawyer who led Sam Bankman-Fried's defense described his client as the worst witness he has ever seen. (Bloomberg)

In a new court filing, the FTX estate demanded that the IRS justify its demand for $23 billion in back taxes, which the company claims is unfounded and delaying the ability of creditors to recover. (The Block)

Sen. Elizabeth Warren (D-Mass.) announced five new Democratic cosponsors for her crypto anti-money laundering bill that the industry has decried as invasive and unconstitutional. (U.S. Senate)