Caroline Bowler

Australia’s premier home-grown cryptocurrency exchange, BTC Markets, has released its third Investor Study Report, revealing a dramatic increase in average initial deposits from sophisticated investors.

The report provides a comprehensive analysis of investment behaviours on the BTC Markets exchange from FY21 to FY24, segmented by demographics of its 362,000 clients, and includes insights from a survey of 1,290 Australian adults conducted by market researcher Protocol Theory.

The study revealed a substantial disparity in initial deposit inflows on the BTC Markets platform over the past year. Non-retail investors have seen their initial deposits grow by an impressive 189%, while retail investors experienced a decline of 15%. Additionally, Self-Managed Super Funds (SMSFs) and trusts also saw increases, with deposit growth rates of 50% and 12%, respectively.

BTC Markets CEO Caroline Bowler highlights a notable shift in the crypto space, emphasising the increasing role of established investors in shaping the future of digital assets.

“Our latest analysis reveals that trading volumes are now driven by more sophisticated investors, instead of the small retail investors that typified the early crypto boom,” Ms Bowler said.

“This resurgence among more traditional investors reflects increased confidence that the asset class and associated technologies align with their investment thesis. These experienced investors, known for their thorough due diligence, are favoring ‘buy and hold’ strategies over speculative trading,” she added.

A year of resilience and revival

In FY24, BTC Markets experienced a remarkable surge in year-on-year trading activity, following a broader market decline over the previous two years, with average trade volume increasing by 60% and trade value rising by 40%. Average daily orders also grew by a modest 15%, indicating that while investors are executing fewer transactions, they opted for larger trades.

Bitcoin (BTC) continued to lead as the top-traded cryptocurrency, while Ethereum (ETH) and XRP retained strong positions. The growing prominence of stablecoins like USDT and USDC, alongside the rise of Solana (SOL), underscores a shift in market dynamics and a broadening of investor interests.

Ms Bowler asserts that despite Bitcoin reaching an all-time high of A$111,440 on March 14, the market remains in its early recovery phase, contrary to some views that suggest the onset of a bull market.

“Although trading volumes have improved, they have still not yet matched the peaks of FY21. The approval of spot Bitcoin and Ethereum ETFs by US regulators led to growing institutional activity, but persistent inflation, rising interest rates, and market volatility have tempered this momentum.

“Moreover, the fourth Bitcoin halving event in April 2024, while symbolic, took place in a more mature market and resulted in a gradual price increase rather than a significant surge,” she added.

Female investors ‘closing the gap’

According to BTCM, gender disparities in the crypto space are narrowing. Female investors are now catching up to their male counterparts in portfolio values and trading consistency.

The report shows a continued flattening of gender lines in average portfolio sizes. Males had a 13% higher average portfolio size than women in FY21 and FY22. However, in FY23 and FY24, this gap reduced to -1.63% and -0.81%, respectively, indicating that females now hold slightly larger portfolios on the BTC Markets platform.

Further, while males traded 8.5 times and 10.6 times more frequently than females in FY21 and FY22, respectively, this disparity has narrowed over time, with males trading 4.6 times and 3.5 times more frequently in FY23 and FY24 respectively.

Ms Bowler said: “Despite market fluctuations, female investors have shown consistent engagement on our platform, taking a disciplined and cautious approach. They often start with smaller investments and gradually increase their commitment.

“This mirrors traditional investment behaviours, where women are historically seen as ‘risk-averse’ and less likely to invest. However, they are closing the investment gap faster than ever before,” she added.

Older investors remain ‘cautiously optimistic’

The report highlights that while 25-44 year-olds are the most active crypto traders, older investors (60+) stand out for their higher initial investments and largest portfolio sizes, due to greater financial stability and accumulated wealth.

Additionally, survey data shows that 44% of those without current cryptocurrency holdings are either considering or open to it in the future. Notably, about half of those aged 45-54 and one-third of those aged 55+ are interested in exploring cryptocurrency.

Furthermore, over one-third (36%) of Australians aged 35-64 believe cryptocurrencies provide a unique diversification opportunity. This belief is even stronger among experienced investors, with nearly half (46%) of those in the same age group who rate their investing knowledge as ‘Very High’ or ‘Extremely High’ supporting the idea.

“While younger investors dominate trading activity, older investors are increasingly engaging with cryptocurrency, albeit with a more cautious and research-driven approach. They prefer to conduct thorough due diligence, consult with professionals, and carefully analyse the market before making investment decisions,” said Ms Bowler.

Key trends shaping crypto’s future

Ms Bowler identifies three key trends that will shape the cryptocurrency industry in the coming years: the growing influence of traditional finance, the impact of the 2024 US presidential election, and the need for a supportive regulatory framework in Australia.

She strongly believes that while Australian investors are enthusiastically engaging with the crypto space, the absence of a supportive regulatory framework is clearly holding us back.

“Global financial giants like JP Morgan, Standard Chartered, Goldman Sachs, HSBC, Citi, Fidelity and Franklin Templeton are embracing blockchain technologies. Yet, Australia’s multi trillion-dollar asset management and superannuation industries remain detached from these conversations,” Ms Bowler said.

“Countries like the USA, Singapore, Thailand, the UAE, as well as the EU have advanced their regulatory frameworks to meet investor demand, but locally we have seen little progress under two Federal governments. We continue to wait and debate.

“We need to create regulations that both encourage innovation and protect consumers, we need to foster greater collaboration and education among stakeholders, and we need to ensure Australia’s place in the future of finance.

“We hope this report can spark meaningful conversations in the industry and beyond,” she concluded.

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