Bitcoin Forum

Hi.

Nowadays everyone is talking about the institutions getting into the game and how this is going to turn BTC into a serious asset, not a speculative one because they will hold it for a long time thus decreasing volatility.

But hodling is a clearly inferior strategy especially if an asset is volatile. I get that just hodling worked for practitioners and they got stupid returns (I'm a small time investor myself) but it was possible because BTC is a "new paradigm" asset that was worth peanuts in the "early days" (whenever that was for you) and just holding onto coins ignoring ups and downs still gave people fortunes.

Real smart strategy is to buy and low sell high obviously, and if an entity has $50M to dump into BTC, they can afford a guy who will watch the market and sell some if the price goes down to buy later at a lower price. Just because they transferred their chunk from coinbase to an unknown wallet, doesn't mean they can't transfer it back.

At some point this bull market is going to top, and there will be selling. Institutions are more calculated than retail, but no one wants to be last when a selloff happens, no matter if you're big or small. So if we get to let's say $200K and fall from 50% there, BTC will still be a speculative asset, because all those institutions who poured in at $110-200K will not be in profit and if they keep their stash their hope will be price appreciation in the future (speculation).

I guess if some biblical super cycle occurs and BTC eats gold and other "safe" investments in one go it will become the main "store of value" game in town and not a speculative asset anymore. But that seems to be too optimistic for now, although who knows.

Anyway, what do you think about this institutional investor thing?

Volatility and "tops" are short-term. Hodling is long-term. I think that the bitcoins you hold now with be worth more in the future regardless of tops and volatility.

To your point, I believe that Bitcoin is heading into another bubble. Who knows where it will land on the other side, but I guarantee that there will be a lot of tears.

As you said, institutional investors are big players, and their existence or their holdings are long-term. It will decrease the volatility. And if it is less volatile then other risk-averse people will buy it. In Canada, they issued Bitcoin ETFs and there is significant interest in that. Similar actions will bring additional value to Bitcoin.
Yeah even though Bitcoin is revolutionary technology or investment, it is susceptible to failure too. But it will not be a technological failure, it will be a failure related to thoughts about Bitcoin. Early adopters thought of Bitcoin as great technology to replace traditional money. But nowadays, people think of Bitcoin as a speculative asset that if you buy it will go to the moon. Early adopters will not leave Bitcoin as long as they have to, but for others selling bitcoin is just trading cryptocurrencies, it does not mean a lot for them.
However, Bitcoin is still strong. I do not think "great sale" will happen anytime soon. Hoping it will end fine for everyone.

you are right

Listen to podcast 34 between Saifedean Ammous and Michael Saylor, long term hodl means you can still make a profit by borrowing against your holdings

https://saifedean.com/podcast/34-michael-saylor-on-the-fiat-standard/

If you think about it, Bitcoin has basically always been this way; the only thing that really changed is that we have a bunch more big players now than in the past. It's definitely going to be a wild ride if these institutions start playing speculation games on the side, but there's really not much we can do about it, like how people used to accuse whales of manipulating the prices some years ago.

One thing of note though, is that these institutions actually have a job to do (i.e. their actual business), and I'm not sure a lot of shareholders will be happy with their money essentially being used in gambling. We can't stop them from dumping, but I don't think huge businesses buying low and selling high will be all too common either considering that it's not the easiest thing to fit into business models. Most of them are probably actually trying to diversify knowing it's still early.

Yes, large institutional investors have ignited holding mode as a long-term motive because:
1. they do not trust and trust banks, after the great recession and inflation.  
2. They withdrew from the stock market because of the decline from the industry's influence by Covid.  What better if trust bitcoin and turn it into super wealth?  Bitcoin has enough elements to reach a million dollar fortune.  In the meantime is the movement, nailing of the bulls and a price adjustment with post-meal take profit.  of which, who will be holding bitcoin from 20k-30k and still holding it until now?  New ATH, worth millions of dollars :)).  I don't think so, because speculation is a source of returns.

Hodling an asset with a fixed supply increases volatility, it doesn't decrease it.

Volatility is actually the majority of the timeline though for Bitcoin,,, is it not? You do see periods of sideways trading for sure but more than half of the time it is in rally or in correction phase, and even in consolidation phase you often see very high percentage of movement either way.

The tears will be plenty I agree with you,,, but I wonder just how high it will go first. 100k will it start attracting many more people and go up even higher or we will not even see it?

Every story has two legs to it. So when institutional investment is a good thing in general, there are bad things no one talks about. Now we need to see which one is more effective and positive for the overall market and decide wisely,

Good things:
1. Additional liquidity
2. Make bitcoin a more serious asset to the mass
3. Less volatility (expected but not happening)

Bad things:
1. A lot of bitcoins will be taken out of supply for long term
2. Corporates have money and they can emerge as a whale in no time which may grant them a power to control the market
3. Increaed regulatory intervention into bitcoin market

Bitcoin wasn't created to become an investment asset. However, with its meteoric price rise, has made it an extraordinary investment asset to hold onto. So big corporates are showing their interest on bitcoin and the interis increasing on a daily basis. So to some extent, it has become a speculative asset, rather than a currency!

Yes, I believe that is true. It tends to increase volatility because it reduces liquidity.

Personally, I'm thankful I didn't make any trades today whatsoever, phew  :-\. I've been here for quite a few years and still haven't taken the big plunge and switched over to crypto from of fiat. Today's dip and others like it are probably a good reason (just guessing) why institutional investors also haven't decided to go balls in.
   Speculators play it safe, but they say, the less of the risk, the even  lesser the reward.

actually, my thoughts on corpo hodlers were echoed in this video

https://www.youtube.com/watch?v=TljAqr4Dx7o

Benjamin Cowen - Collaboration with Bob Loukas: Bitcoin's Market Cycles

Bitcoin might have change it's narrative when this institutions and big companies enter the picture. And they play a big role in pushing the market to it's top no doubt about that. However, for me, bitcoin will and still be a speculative asset, even if this institutions will invest their big chunk of money. It's a boom and bust, it's cyclical, the bubble will be burst soon, and then repeats again. Maybe we can see new set of investors in the future, but the speculative asset thingy will remain.

Institutional investors are simply rich players in this market. They invest in bitcoin only for the purpose of making a profit. The general expectation of a significant increase in the price of bitcoin has captured them too, but they can just as quickly leave this market as they entered. It should be admitted that bitcoin today is mostly a speculative asset. This is not good for the cryptocurrency in general. The high price of bitcoin arouses people's interest, but increases the risk of losing funds.

Bitcoin Outflows From Coinbase Suggest Institutions Are Buying the Dip (https://www.coindesk.com/bitcoin-outflows-from-coinbase-suggest-institutions-are-buying-the-dip)
More Institutional Investors Jumping Into Bitcoin Leaves Less to Go Around, Data Shows (https://www.coindesk.com/more-institutional-investors-jumping-into-bitcoin-leaves-less-to-go-around-data-show)

Inflows, outflows, price can change with time but the growth and the trend of bitcoin price is strongly moving up. Price is built by capital and huge capital comes from institutional investments, not from retail investments.

With some analyses that institutes are participating in bitcoin more dramatically and more giants are planning to join, Moon is waiting ahead for bitcoin.

You are focusing a lot on short term fluctuations of the market and are also confusing day trading with investment.
Short term fluctuations are something that a day trader who never "invests" in bitcoin is looking for. When price goes from $62k to $55k and back to $60k that is when the day trader makes profit while the investor doesn't care because they buy at $50k for example and maybe sell some in a year from now when price is $500k.
Investors also don't want to expose themselves to the huge risks that come with day trading (both from price volatility and exchange hacks).
Institutional "investors" are "investors" not day traders.

That's a dangerous thing happening! I am not denying the fact that institutional buying has greatly helped bitcoin to reach its current stage. But too much of institutional holding will further centralize the market and since bitcoin market is not regulated, it's pretty easy for them to manipulate it. That's where the problem is!

Corporates have billions of dollars worth cash reserve. They can become a whale in no time! Too much money comes with too much power and that power must not be misused. That's all!

This kind of person that don't really day trade and are worrying about the drops in the prices from time to time are people that believes that if they have a bitcoin, they can get a lot of money as quick as possible which is the wrong mindset when you enter in bitcoin market or for anything finance related matter at that.

Your theory doesn't hold in my opinion. Holding has been, still is and will be the superior strategy. Playing trading has much more risk of losing your money than simply holding an asset that is on its way to replacing gold, at least in part, as a store of value, as well as other traditional assets. What we are seeing in this cycle points to that, institutional buy-in, ease of purchase, increased demand, etc. It's not a matter of optimism, it's a matter of observation.

The situation before is far different than now. There's a tons of money on the line in the current market while on the previous bull run, Only FOMO traders just buy in which means the orderbook was very thin. Institutional investors will not let the market dump since they have backup funds to DCA in case the price go south.

Holding is indeed superior, but holding also requires patience and must enter at the right price. Holding takes a long time.

But about the risk of losing by trading, it only applies to ordinary people who do not understand trading. I am currently holding as well as trading at the same time and it is a very good combination for making a profit.

they play an important role for bitcoin in the long run. If without them bitcoin fundamentals would be easily torn down by fake news that makes FUD. They make the first support of the analysis a reflection in the correction. I think at the moment only tesla institutions are properly included in bitcoin completely. Who is the future?