Bitcoin has inched closer to its record to hover near $71,000.

But the soaring price masks a shift in dynamics that has seen retail traders sit out the rally.

Take Coinbase. The exchange said a slump in retail trading helped drive lower-than-expected revenue in the third quarter.

“This year in particular, there was a lot of negative sentiment which likely deterred traders,” Adam Morgan McCarthy, an analyst at the data firm Kaiko, told DL News.

However, Coinbase warned that choppy crypto prices in October will also be a headwind in this quarter.

Coinbase said it expects fourth-quarter revenue in the range of $505 million to $580 million from its subscription and services unit — a retail product.

The outlook, which follows a 7% quarterly drop in revenue in that division, “reflects certain headwinds including a 10% price decline in Ethereum in October compared to the third-quarter average, as well as lower interest rates,” Coinbase said.

It’s a sign that retail traders have shied away from crypto trading and have yet to return, at least not en masse.

The forecast, along with missed earnings targets, spooked investors. The shares fell 9% on Thursday in New York.

Coinbase said that muted volatility combined with falling crypto prices meant fewer investors flocked to the exchange.

Flattened by the arrival of larger institutional investors and spot crypto exchange-traded funds, Bitcoin’s volatility has dropped 40% from 2020 to September, according to data from Volmex.

Morgan McCarthy added that major selling events — from the German government and bankrupt crypto firms like Mt Gox — added to the pessimism.

It’s not just Coinbase.

Payments giant PayPal saw the amount of crypto it held on behalf of its customers drop almost 11% from the second to third quarter, even as Bitcoin rose during the period.

That’s because institutional investors are taking up a bigger share of the market and driving prices more than their retail peers.

CryptoQuant, a research firm, notes that over the past year, demand from so-called whales for Bitcoin spot ETFs is twice that of retail.

Still, there are some bright spots in the retail trading scene.

“We’ve seen volumes bounce back somewhat,” Morgan McCarthy said. “Bitcoin volumes on Coinbase increased at a faster pace than on Binance, for instance.”

Liam Kelly is DL News Berlin-based DeFi Correspondent. Got a tip? Email at liam@dlnews.com.