According to a new analysis by JPMorgan’s Nikolaos Panigirtzoglou, retail trading activity fueled the rise of crypto and US equity markets this summer.
Retail investor flows into exchange-traded funds and US stocks reached a near-record high of $16 billion in July, according to a JPMorgan indicator that tracks the retail market, with flows remaining high “at around $13 billion, well above the previous record high of $10 billion seen last June.” Typically, the markets are quiet during the summer months as Wall Streeters go on vacation.
Flows into exchange-traded funds and mutual funds, according to the bank, also show an outsized presence of retail traders.
So far, equity funds have received nearly $700 billion in flows, or $1 trillion on an annualized basis, representing a 58 percent increase over 2017. This has been a boon to the market, with the S&P 500 Index rising by more than 18% in the last six months.
“The equity market will continue to rise as long as this retail flow continues,” Panigirtzoglou wrote.
According to JPMorgan, a similar story is unfolding in the cryptocurrency market.
According to Panigirtzoglou, “the strength of the retail flow over the past month has not been limited to equities.” “Investors have also boosted crypto markets in August.”
The following was added to the note:
“The August rally in non-fungible tokens (NFTs) and the increase in DeFi activity have aided not only Ethereum, but also alternative cryptocurrencies that support or plan to support smart contracts, such as Solana, Binance Coin, and Cardano.”
Crypto exchange web traffic increased by 27.8 percent month over month in August, reaching 408.2 million visits.