Bitcoin Forum

Was it not surprising that the price of bitcoin falled to $16600 recently from a price over $19000, but the price later increase back and having a resistance at $19000. Noramlly, people would have expected the price of bitcoin to crash again when it falled, but the price rose back to over $19000. In today's crypto news, I read it is as a result of institutions buying bitcoin from bitcoin whales. Before the fall, many whales move bitcoin to exchanges, and we know it will not be for any two reasons but to sell the bitcoin, it could be some of the bitcoin that will be sold, but that known to them.

After that, the price of bitcoin still fall but still rose back, which would be as a result of institutions like Grayscale, Square and PayPal that are buying the bitcoin from the whales and also from miners. Expecially Grayscale proving to be one of the reasons.

https://i.imgur.com/63ILvke.jpg
Grayscale Bitcoin buys versus flow in November 2020. Source: Coin98/ Twitter

Grayscale bought more than the mined bitcoin in November, 2020. Simultaneously, this week saw Bitcoin break all-time highs and challenge $20,000, only to encounter massive selling pressure.

Having bounced off lows of $18,100 and returned to circle $19,000, BTC/USD looks primed for another test of the seminal level, but selling dynamics remain unusual. With sell walls at $20,000 still firmly in place, longtime hodlers and whales looking to exit have reliable buyers in the form of Grayscale and other institutions. Evidence points to increasing inflows from whales to exchanges this week, something which coincided with the $20,000 attempt. Should selling already be keeping prices down, BTC should thus be finding its way from whales to the stronger hands of Grayscale and its clients.

https://www.google.com/amp/s/cointelegraph.com/news/bitcoin-whales-selling-to-institutions-as-grayscale-adds-7-188-btc-in-24-hours/amp

Nothing to get surprised, because the market is moving without any external pressure. Based on the whale moves and the institution investment the market is said to be bouncing. This is true to some point, beyond that is the circulation. The market circulation have been increasing with time due to the large scale acceptance and adoption of cryptocurrencies and blockchain development. Level of investment increasing above the total sum mined shows the interest of institutions on bitcoin investment.

I have been closely monitoring Grayscale flows recently.

If you are a reader of my thread:

Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! (https://bitcointalk.org/index.php?topic=5256529)

Those flows actually shouldn’t surprise you.
As I said elsewhere the correct way of looking at it is not: “Grayscale bought more Bitcoin than daily supply” as Grayscale is not buying newly mined coins. Rather they look at the 18 millions coins already mined. So the correct way of looking at it is : “Grayscale is buying coins from weak-hands whales”.

These moves from the whales are bold in such a way that they continue to acquire more bitcoins without any hesitations at all. It’s as if they know that the steam is not gone and that they will be able to profit more even if their most recent buying points are mostly at the top. I wouldn’t blame them though. I wouldn’t blame them though. Sell pressure is almost non-existent on exchanges across the board. And even if the price comes down right now, they’d still be in the green based on their averages, most coins of which were acquired in $13k below.

It was someone's statement in Grayscale that if some people think that they will stop buying, this is the beginning, but I do not think that a single entity can move the price from $ 16,000 to $ 19,000.
You need a lot of liquidity, otherwise one of the platforms will give a completely different price from the rest of the platforms, and I don't think it will directly lead to an increase in the price.

bitcoin martketcap need too many work and cleaning

I've read of that news even earlier before bitcoin reached $19k. Grayscale has been doing that, IIRC, since the earliest of first quarter - February 2020.
Grayscale Investments bought up to 33% of all newly minted bitcoin over the last three months, as the asset manager continues to stockpile major cryptocurrencies. (https://news.bitcoin.com/grayscale-buys-33-of-all-bitcoin-mined-in-last-three-month)

Correct me if I am wrong, but I feel terribly bad for the small investors who are forced to sell when the price dropped to $16600 as you have mentioned. Goes to show how much power these whales have even over our bitcoins. One sell and *poof*, everything gone. That being said, what I'm more scared about is these corporations jumping into the cryptocurrency train. They weren't supposed to be here in the first place since bitcoin is for the free people, and I do appreciate the fact that with them on the industry, it allowed more people to invest. However, I also see this as them doing what megacorporations are good at, capitalism. Hopefully we find a way to put the power back to the people and to tip the scales in our favor.

Anyway, even if these mega corporations will join the crypto market, I don't think they have the solo power to dictate the price in the market. Because if they do, then the btc price may not increase as what we want to. It is the supply and demand why we are experiencing the price change. So if they will not create demand then the market will eventually die. So having all sorts of investors in crypto will do good in the market. Not that only few people or institutions are holding the neck of btc price. It is not good on their agenda if they will just amass the large percentage and control the market.

Isn't this exactly what we need for healthy mooning?

Big companies are bringing fresh blood and they need a lot of market liquidity to buy tons of bitcoin. Otherwise they would have to buy from thin sell walls, and that would make the rise parabolic, fast and unsustainable.

I wouldn't say that it was a force sell, small investors should have known better that if they sell their bitcoins then obviously someone are going to scope it from them. So it's possible that Grayscale are just waiting in the wing, for those weak hands to sell their bitcoin. It's the business of making money. It's not that they threaten someone to sell, it's not like that, so everyone has a choice, if you feel nervous and panic because the price suddenly goes down to $16k then it's your lost.

They panic sold and were not forced to. A drop from the range of 19k to 16k is about 18%, this should not be enough to shake one out of their holdings especially as it's coming after the asset has almost doubled in value over few months. There would always be such price corrections in the market, and it usually shakes out weak hands who would have limited organic growth.

Bitcoin is for everyone, it's a free asset and anyone who is interested can purchase some, even governments; but no one can control it.

Not necessarily from whales. It's probably from traders.

Usually the majority of volume on exchanges is made by traders who exchange between each other. Bull buy, bears sell, but they don't exit after selling or buying. They stay on the exchange waiting for their prediction to come true.

Those who became bearish at 19500 and sold 5-6 days ago instead of selling to bullish traders sold into the hands of investment funds and those coins went out of the exchanges.

People were writing about this trend of decreasing supply on exchanges more than a month ago.

Especially if we know that Chinese miners are having trouble selling their mined BTC, at least if we believe the news we’ve had a chance to read recently. After all, such coins are called "virgin bitcoins" and some say that they have a premium value between 10% -20%, so I don’t think Grayscale would even be interested in such a purchase.

I also agree that real whales know the potential that BTC has, so they trade very wisely with it - by making a profit when the price is at the top, and by buying when a correction occurs. It will be interesting to observe how many of these weak-hands whales actually exist and how heavy they are, that is, how long they can satisfy the appetite of the largest whale and all those who try to follow it.

Grayscale has been buying a lot of coins but I am not sure if this was the full month. I believe that is the total number they have and not the amount they bought in November alone. I might be wrong, we do not know how much they bought, well you might but I do not, but I know that they have bought $38k during last spring and summer, which means either they bought $38k bitcoins in 4-5 months total and then $55k in a single month, or maybe this is wrong to assume it was in all one month.

In any case, they are definitely bringing a good light into bitcoin and showing the world that bitcoin could be profitable if you are a huge company that can wait for a while (they didn't even had to wait) and that will only result with many more big companies coming in and buying tens of thousands of bitcoins.

Those weak hand whales could have more BTC than anyone because I know you wouldn't just give it up. Maybe cashing in a little Of your stash is needed or something. It's hard to sell that many coins immediately, so perhaps as institutions buy more Bitcoins, why not sell it and have that direct trade. I wouldn't think to deposit anything close to that amount, if I had one, towards an exchange

https://www.coindesk.com/microstrategy-50-million-third-purchase

MicroStrategy CEO Michael Saylor announced his company’s third bitcoin purchase on Twitter Friday evening, per SEC filings the same day.
Saylor purchased 2,574 bitcoins for $50.0 million in cash bringing the business intelligence company's treasury holdings to approximately 40,824 bitcoins.

https://twitter.com/michael_saylor/status/1334990791496884224

I wonder if Grayscale knows something that others not or if they are only raising the price so they can dump from a higher price...

There are lots of rumors saying there will be a big monetary reset and bitcoin will be the new world reserve currency.

I wonder if Grayscale believes it really.

They were actually opportunist whales which only joined the crypto investment scheme to manipulate and also profit from it only, the best every genuine crypto enthusiast have to do is to accumulate more BTC whenever they dump it or in the future they may cause a big problem on the market because crypto haters may use them as their weapon.

Weak hands sell when the price is falling, not rising. This doesn’t fit the definition at all. People have all manner of different reasons for selling or buying, it can’t be summed up in a two dimensional way as either weak or strong hands. Profit taking is not a sign of weakness, especially as the law of big numbers kicks in more and more. Bitcoin can’t continue the pace of price acceleration, and as it slows or stops, there are better opportunities elsewhere. That’s more what I see selling as at these prices.

I see your point and you are correct.
I might have oversimplified.
Of course a whale holding from 1 USD and selling at 19,000 cannot be defined “weak hand”, as the PayPal buyer at 19,000, ready to sell at the first 2k red candle cannot be defined “strong hand”.

Bitcoin gain value by the number of interest, now that Bitcoin whale selling to institution and universities are using it as a tuition payment the value must definitely increase.

One reason why the institutional investors are reluctant to invest in Bitcoin is because of its volatility. But if it can be proven that the returns from investing in Bitcoin can be much greater than investing in other mainstream assets, then the institutional investors may consider cryptocurrency. Who doesn't want to invest in an asset, which could potentially give you 5x or even 10x returns in a matter of two-three years?

I read the analysis but  the name of the game is the greater fool , the price will keep going up as long as the demand is more than the supply. once the supply is more than demand you will see price correct significantly, something just tells me that the whales are waiting for the price to crossover $20k before they allow the price to correct, they correction is coming I don't know when

This is dangerous thinking. All the positive sentiment notwithstanding, don't ever discount that bitcoin price is actually governed by the value that common users attach to it and the amount of usage or use-cases it can have. There is no need for someone to put their savings on the deck for them to be a crypto enthusiast.

I too ponder on this. Some of these institutions are visibly bullish about bitcoin on their twitter and such but the reasoning that you will hear is little more than "Bitcoin is it". I don't think institutions make their decisions like that. It can only be a very conscious decision because of these companies planning to launch or sponsor financial products backed by bitcoin. They can range for simple buying and lending to cross-border investment and transfers.

"The Great Reset" is something I feel is conspiracy theories arising from the precarious conditions post-pandemic, particularly in the USA, and Trump's loss.

What they know for sure is that they earn very well from the fees for their services, and by what @fillippone posted some 20 days ago, currently that fee is an incredible 27 BTC per day, which is a little over $500 000 each day :o

Also, Grayscale does not own this BTC, they are owned by their clients so it cannot happen that Grayscale decides to sell them at any time.

You are right. I actually wrote that post a few times ago, and in the meantime the daily fee increased up to 30 daily BTC (that’s another 10% increase).
I am going to publish something later today helping getting track of this.

If you think about it this is a little bit frightening in a way, whales are without a doubt strong hands otherwise they would have been unable to keep their coins since they got them at a cheap price years ago, but now even stronger hands willing to buy at a price close to 20k have appeared which tell us that most likely those coins are never going to be back in circulation again or if they do then it will be when the price of bitcoin is incredibly high.

Bitcoin is slowly entering a new era in which institutional investors will begin to dominate the market and become the new whales, I do not know if this is good or bad but the dynamics of the market are bound to change because of this.

You make a good point cause people don't need to put their saving in crypto before they can be a crypto enthusiast but i need you to understand that most of the positive sentiment made by 95% of whales that just join crypto investment is because they see Bitcoin as a fast means for them to making money.

I think that's a fact more or less, if they don't believe that bitcoin will not give them huge profits, then what are they doing here, right? So yes, I also believe that they have the notion that this type of investment will reap high returns in the future. Because if you don't believe in one thing, you won't waste your resources to it.

24Kt, if you read a few posts back then you can find out that Grayscale provides a service that currently brings them around 30 BTC per day in the form of a fee they charge his clients. The question now is whether they keep that BTC or sell it as soon as the fee is paid, but the way they set things up is a win-win situation for them.

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24Kt, suzanne5223, wxa7115, please pay attention to how you use the quote option - you can edit post/s and leave only the part to which you respond, and it is completely unnecessary to quote the whole OP.

So we,as Bitcoin supporters have to rely on a few big companies and trust funds like Grayscale to pump the Bitcoin price by increasing the overall demand for BTC? :(
Is this supposed to be a positive sign?What if funds like Grayscale start selling BTC?The price will probably go back to 6K USD in no time.I know that Grayscale is buying BTC mostly for long term HODLing,but we can't predict how this company will react to the BTC market and what will happen,if Garayscale has new shareholders,who aren't Bitcoin maximalists.
I'm still waiting for mass Bitcoin adoption and the creation of a BTC market,that would be almost free(100% freedom is impossible)of the influence that institutional investors and crypto whales have over the price.

Part of mass adoption is big companies and institutions jumping in. You can't expect them to all wait until you hit your price target and have them buy your coins from you at that price right? They will always have a big influence just because of their massive size.
These funds will not be selling and dumping the price back to 6k as bitcoin is basically their business model. If the shareholders want to get out, they will have to sell their shares to other interested people.

Over the counter trading in bitcoin world needs to get bigger and bigger and there needs to be ways to get thousands of bitcoins for these huge companies to get involved. Do you think that companies like JP Morgan who would invest maybe a billion, or maybe even few billion into bitcoin would do that over coinbase? That is nearly as impossible as it sounds, which is why they won't get in until it is possible.

What could make it possible however is an over the counter middle man system where people with thousands of bitcoins and people with billions of dollars could make the exchange a lot more legally binding way face to face and sign some papers (when you do business in billions, I am sure actually being face to face costs shouldn't matter) so that it could be more professional.

I think that's exactly what's happening.  And this time, some of these whales have faces, e.g., MicroStrategy, Grayscale, and others. 

That's the how, but I'm wondering about the why, as in why are these large corporations snapping up bitcoin as soon as its mined.  Somehow I don't think it's just bitcoin fever hitting them, because they're accountable to their shareholders (I'm thinking of MicroStrategy here) and there must be a damn good reason they're heavily investing in such a risky asset as bitcoin.

But hey, it's great times for everybody who owns bitcoin right now.  We're getting closer to the ATH and 2020 hasn't even ended yet....but the paranoid little bird that lives on my shoulder is telling me that the banking system and/or global economy is about to take a serious spin-kick to the liver.  That wouldn't be good for any of us.

How risky is it? It isn't 2010 anymore. Grayscale launched their Bitcoin trust 7 years ago. Institutions have been quietly entering the market for years, since before the last bubble in 2017. Plus, there is a whole spectrum of institutions in terms of how much risk they are willing to take on. Pension funds opt for less risk. Hedge funds opt for more.

But anyway, for institutional funds it's all about performance. It's no secret on Wall Street at this point that, from a purely technical (price) perspective at least, Bitcoin is one of the most attractive investment assets on the market. I think we're seeing institutions flooding into the Bitcoin market now for the same reason they were flooding back into the stock market this past summer. It's all about the returns, not about the fundamentals. Everyone is watching everyone else profit, and they want in. When I've talked in the past about positive price feedback loops and how they propel bull markets forward, this is exactly what I mean.

Well, I get your point, but this is exactly how Microstrategy got into BTC: trough Coinbase.
Read here (https://bitcointalk.org/index.php?topic=5268108.msg55730795#msg55730795).

They chose Coinbase to execute a series of automated trades and OTC trades to get in.

Seems like this Greyscale just wants to buy up every Bitcoin in the market, it’s now like a competition for them, they keep more and more bitcoins and storing them up. This makes me wonder what’s going to be the situation if they happens to sell a major share of their Bitcoin holdings, the market will go down seriously.

Anyway, I am guessing that wouldn’t be the case as time goes on they will be having more and more clients and all of them wouldn’t be selling at once, as they are selling they will be buying more as well. I wouldn’t like the whales to mess everything up 8).

This is good news for bitcoin lovers and whoever hold bitcoin. 7000 is truly a big number and I doubt that there are many people who are capable of buying such an amount of bitcoin unless you are a whale.

Should we consider Grayscale, Paypal as whales? If they could add 7199 bitcoin in 24 hours, they can easily sell off their bitcoin in less than 24 hours. Just looking forward to the best. I don't think that they will try to make a huge impact on the price of bitcoin. There is no reason unless they want to manipulate the market and create FUD. Creating FUD is the easiest way to collect more bitcoin at a cheaper price. However, Investors are currently smarter than they used to be in 2017. They will not give up on bitcoin effortlessly

The main reason why institutional whales like grayscale and microstrategy are buying bitcoin is because they know bitcoin is a store of value and that this will help their company in return. I remember what the Microstrategy CEO says about gold, that unlike bitcoin that has a limited supply, that the limited supply will help bitcoin later in time in a way its price will increase that it is very possible people will be leaving gold for bitcoin. Also, it is clear to us how fiat are depreciative in nature and why people may prefer bitcoin over fiat and why these companies are criticizing fiat. In my opinion, these companies are likely going long term because they know how bitcoin is valuable because of its limited supply, the characteristic many assets is not having. And, I believe bitcoin is just still like new, with time we will realize this, how limited supply will have more positive effects on bitcoin price and adoption.

As this institutions are slowly gathering Bitcoin, I'm quite afraid a bit that there is a possibility that there will be a time that they will take profit and will sell a huge portion of the Bitcoins they are holding.

I'm not as happy as it is showing because I'm thinking of the negative side of it more than a positive side. Its obvious that this run is mostly institution-driven since we saw companies like Grayscale, Square and Paypal buying Bitcoins and more companies will do it too. Now we are not just seeing the whales buying it but also the institutions.

We are moving from "whales" situation in crypto where we didn't know who exactly had too many bitcoins in tens of thousands, to more like a company owned huge chunks instead and I don't know which one is better.

We didn't know who owned bitcoin in those large numbers back in the day, we still don't know many of them and that was the bad part but the bad part about companies going in is even if we know how much they know, we also leave the price to a centralized situation, if grayscale decides to sell every single coin they have today, they could crash the price right away.

Back when it was just some whales, they usually never moved all at once, which means harder crashes by whales, but here we are giving that power to some companies and that's scary.

Institutional investors will not sell their Bitcoin as PlanB says.

https://twitter.com/100trillionUSD/status/1336274591287799815?s=19 (https://twitter.com/100trillionUSD/status/1336274591287799815?s=19)

Of course, the price of bitcoin worries, but even worse is that all the bitcoin that these large investors have bought will not circulate in the market again is what is coming to light.

We need to hold our bitcoin because new changes are coming.

Yeah these massive transactions are definitely scary. These Companies are going to be a big player in the bitcoin market now. Do we know what the Whales are doing with there new fortunes? It could still be a good think for the crypto community if the whales would reinvest their money into alternative coins?

Grayscale is still on the move buying more bitcoin, it was surprising how this institutional investor bought more than the Bitcoin mined in November, 2020. And yet, buying more bitcoin.

https://www.coindesk.com/grayscale-has-19b-in-crypto-assets-under-management-up-from-16-4b-last-week
Digital asset manager Grayscale Investments has passed another milestone, reaching $19 billion in assets under management (AUM) on Dec. 28, up from the $16.4 billion announced last week.

As you can see from my spreadsheet (https://docs.google.com/spreadsheets/d/1OsJ3JtZRC60aoQEnRgPVls_6HeKoyh1Wr7DBDmizpk4/edit?usp=sharing), or from everywhere else, this increase in AUM is simply due to the rise in the price of BTC over the weekend. Actually yesterday the inflows were exactly zero.

https://talkimg.com/images/2023/05/16/blobc2bb4438d7fb4ef2.png

Actually, we say an outflow due to the management fees.

So, it's easy to market an increase of AUM as a success, when you are literally rising with the high tide.

You are very right, and thanks for the correction. Also the $19 billion AUM is not only for bitcoin but also for some altcoins. The fact still remain that the largest grayscale holding is bitcoin with the current AUM of $16.3 billion which was around $14.1 last week which is even what I ought to have mentioned earlier. It is now clear to me how bitcoin price increase led to the increase in grayscale 'asset under management'.

Yeah, in between those posts Grayscale announced today's number. The weird thing is they had still 0 inflows. I knew they were closed to new investors, but still they managed to get loads of investments from old investors. Maybe they completely closed their funds.
I'll find out.

Do you know if they actually collect their management fee in bitcoin?  That's one thing that interests me I don't know the answer to.  I'm assuming if they do, they have to sell for USD anyway because they can't run the business denominated in bitcoin.  The rest of the economy runs on USD, so they have to transact in that currency.  Logistically, I don't know how it would work to collect the fee in Bitcoin.  Would that just be a slow drain on the amount of Bitcoins they have under management then?

In fact, private placements are now closed. Existing clients can still buy, but if a company decides tomorrow that they want to start a Bitcoin reserve, they can't get exposure through GBTC.

The lack of new blood could help trigger a correction, as JPMorgan analysts pointed out here:


https://www.bnnbloomberg.ca/jpmorgan-says-flows-to-into-major-crypto-fund-are-key-to-bitcoin-s-outlook-1.1539440

A few minutes after the above post, I actually discovered not only they are closed to new investors, but also ,as you say, private placements are closed.
This means even old clients cannot buy new shares, hence the existing shares number stopped growing.

Read more here. (https://bitcointalk.org/index.php?topic=5256529.msg55970880#msg55970880)




If you want to read the whole piece directly, you can read it here:

 Wall Street Reports On Bitcoin: JP Morgan Flows & Liquidity (https://bitcointalk.org/index.php?topic=5304479.msg55958298#msg55958298)



Exactly: their fees are collected in bitcoin trough a diminishing bitcoin percentage controlled by each share.
You can read all the details here:
Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! (https://bitcointalk.org/index.php?topic=5256529)

That's what I thought too, until I saw the correction in this article:


https://www.coindesk.com/grayscale-halts-bitcoin-trust-investments

So then I checked against your spreadsheet. Grayscale halted private placements on December 21st, but from the look of things, inflows continued for a few more days after that:

https://i.imgur.com/BwNnMtP.png

I took that to mean existing investors were still able to buy as stated in the Coindesk article, but maybe there was just some reporting lag and existing investors really are cut off. I'm not sure.

As I understand if GBTC gets capitals, they have to issue shares. So if they get capital from an investor, new or old, they may issue shares representing such capital.
So, when they closed to new investors, I would have expected a slowing in inflows, not a halt.
This slowing didn’t happen, as probably “old” investors continued pouring capital (or in-kind BTC) into GBTC.
So sometimes over Christmas, they completely closed, fund subscriptions,  to both old and new investors, temporary, as they did in the past (with that banner on the website).
That resulted in the halt of inflows.

That is not a bad thing, in fact that is a very very good thing. Bitcoin investors would want bitcoin price to go up right? Well the best way to increase the price would be to make it as scarce as possible and not have many on the market, if 20 million coins were bought and sold every day on the market the price would go down a lot, but when it is few million that is a lot better. So long story short big investors did helped with the price without a doubt.

Also you know what else that is good for? The transaction fees. Because in the end if they just buy it and put it on cold storage that means they are not going to send and receive bitcoin, which means there are less btc going around the world, which would make things cheaper as well. We are not there yet but I am 100% sure we will be there once these big companies corner most of the bitcoin market.