Crypto investors found something to cheer about amid the recent downturn in digital tokens: the asset class held up better than just about everything else in the third quarter. Yet the hunt for a bottom continues as long-term holders cling on with expectations that there's more pain to come — and retail investors stay on the sidelines.

Even with the narrative going around that crypto hung tough in the July-September stretch, the mood has remained sour. While around 83,500 new digital wallets are coming online daily, that's a low for the 2020-2022 cycle, according to data compiled by strategists at Glassnode.

Meanwhile, wealth held by “mature coins” is at an all-time high, the researcher said, as long-time investors have refused to spend them amid the market turmoil. The group of investors who ‘hodl' through thick and thin — meaning those who remain loyal even during tough times — has remained “steadfast,” according to Glassnode, which said that they might be hunkering down “for the storms ahead.”

Such is the problem for Bitcoin and other cryptocurrencies now — the cohort of retail-type investors who had fueled much of last year's huge surge in prices have been missing in action. Some market-watchers say that with hodl-investors waiting things out, the overhanging question remains whether — or when — individual investors will make a return.

“The overall price has got to do better, and once it does, the retail investor will become excited again. We definitely don't have that right now because we're just stuck in a range,” said Matt Maley, chief market strategist at Miller Tabak & Co. “There's nothing that turns off an individual investor more than something getting stuck in a sideways range.”

At issue is Bitcoin needing to find a bottom amid a selloff that's brought it down 60% this year. Many analysts say that should US stocks form a floor, then the digital token could too, though there's little consensus on when that might happen. Others argue that once the dollar starts to weaken, then Bitcoin might be able to break upwards also.

Whatever the case, interest in crypto has waned in recent months. Google trends show the general populace has been much less interested in the tokens. And Bitcoin's on-chain activity has been depressed the whole year, according to a note by Jaran Mellerud at researcher Arcane.

“If it is a risk asset, as many including myself have suggested, picking a bottom in BTC is tantamount to picking a bottom in stocks,” Marc Chandler, chief market strategist at Bannockburn Global Forex, said, adding that “the crash has tempered the enthusiasm among” people he speaks with.

With investors sitting things out until Bitcoin and other cryptocurrencies can start to rebound, ETF flows have remained muted too. The money flowing out of crypto-related funds in the third quarter has slowed down and some analysts argue the bulk of investors fleeing happened in the second quarter. Now they're just waiting things out.

There are plenty who say that price recoveries could still be a ways off. That's the view of Ashley Oerth, senior investment strategy analyst at Invesco, who says that cryptocurrencies tend to be valued not by their own characteristics but by the prevailing macro environment.

“‘Next summer' for crypto is probably when we see peak hawkishness from central banks and a start to easing policy,” Oerth said. “To the extent that you're a believer in crypto's long-term potential, now may be a buying opportunity — if you can stomach the volatility.”

Crypto investors found something to cheer about amid the recent downturn in digital tokens: the asset class held up better than just about everything else in the third quarter. Yet the hunt for a bottom continues as long-term holders cling on with expectations that there's more pain to come — and retail investors stay on the sidelines.

Even with the narrative going around that crypto hung tough in the July-September stretch, the mood has remained sour. While around 83,500 new digital wallets are coming online daily, that's a low for the 2020-2022 cycle, according to data compiled by strategists at Glassnode.

Meanwhile, wealth held by “mature coins” is at an all-time high, the researcher said, as long-time investors have refused to spend them amid the market turmoil. The group of investors who ‘hodl' through thick and thin — meaning those who remain loyal even during tough times — has remained “steadfast,” according to Glassnode, which said that they might be hunkering down “for the storms ahead.”

Such is the problem for Bitcoin and other cryptocurrencies now — the cohort of retail-type investors who had fueled much of last year's huge surge in prices have been missing in action. Some market-watchers say that with hodl-investors waiting things out, the overhanging question remains whether — or when — individual investors will make a return.

“The overall price has got to do better, and once it does, the retail investor will become excited again. We definitely don't have that right now because we're just stuck in a range,” said Matt Maley, chief market strategist at Miller Tabak & Co. “There's nothing that turns off an individual investor more than something getting stuck in a sideways range.”

At issue is Bitcoin needing to find a bottom amid a selloff that's brought it down 60% this year. Many analysts say that should US stocks form a floor, then the digital token could too, though there's little consensus on when that might happen. Others argue that once the dollar starts to weaken, then Bitcoin might be able to break upwards also.

Whatever the case, interest in crypto has waned in recent months. Google trends show the general populace has been much less interested in the tokens. And Bitcoin's on-chain activity has been depressed the whole year, according to a note by Jaran Mellerud at researcher Arcane.

“If it is a risk asset, as many including myself have suggested, picking a bottom in BTC is tantamount to picking a bottom in stocks,” Marc Chandler, chief market strategist at Bannockburn Global Forex, said, adding that “the crash has tempered the enthusiasm among” people he speaks with.

With investors sitting things out until Bitcoin and other cryptocurrencies can start to rebound, ETF flows have remained muted too. The money flowing out of crypto-related funds in the third quarter has slowed down and some analysts argue the bulk of investors fleeing happened in the second quarter. Now they're just waiting things out.

There are plenty who say that price recoveries could still be a ways off. That's the view of Ashley Oerth, senior investment strategy analyst at Invesco, who says that cryptocurrencies tend to be valued not by their own characteristics but by the prevailing macro environment.

“‘Next summer' for crypto is probably when we see peak hawkishness from central banks and a start to easing policy,” Oerth said. “To the extent that you're a believer in crypto's long-term potential, now may be a buying opportunity — if you can stomach the volatility.”