Institutional Infrastructure

[Moon Assist]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

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[amishmanish]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

The institutional news was amplified by the relative uneventful failing of S2X and neutralization of Chinese FUD. It gave overhhelming confidence to most retail investors who flocked to exchanges by the millions. The problem was that the ICOs boomed unimaginably too. Hyped products like Tron, Ripple etc. exposed the immaturity of overall market to the serious investors, both product-wise as well as ethics-wise.

These seem to be the fundamentals that have stopped the flow of new money/ institutional money.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

Coinbase custody is a product that basically tells big money that you are not good enough to handle crypto and you should let us do it for you. I don't see how that can be confidence inducing.
A bull run will come but it'll be hardly due to institutional news now. It has to be established that the availability of secure, borderless cash can be put to good use and that it can open up new markets/ opportunities. This will be established only when we start seeing more products and lesser scams.

[Moon Assist]

A bull run will come but it'll be hardly due to institutional news now. It has to be established that the availability of secure, borderless cash can be put to good use and that it can open up new markets/ opportunities. This will be established only when we start seeing more products and lesser scams.

You're right that more products and less scams are needed and will likely be the force that carries the markets.

It's also possible that endowments, pensions, etc haven't entered the markets yet and will be doing so later this year. What effect, if any, that has on the markets is unclear.

[milewilda]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

The institutional news was amplified by the relative uneventful failing of S2X and neutralization of Chinese FUD. It gave overhhelming confidence to most retail investors who flocked to exchanges by the millions. The problem was that the ICOs boomed unimaginably too. Hyped products like Tron, Ripple etc. exposed the immaturity of overall market to the serious investors, both product-wise as well as ethics-wise.

These seem to be the fundamentals that have stopped the flow of new money/ institutional money.

Very well said thats we we cant still assure if that institutional money would really flow into this crypto world since there are still lot of things or factors that would affect such decision.
As you said about the problem on booming up ICO do really exposed immaturity growth which will really result on making such decision for them to get in since they cant assure if it would be beneficial for them or not.

The question would still remained unanswered because decisions would really vary according to their own view and perspective.

[Kemarit]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

Yes. You are correct in your observation. Everyone thought that CME and CBoE offering bitcoin future contracts was the best thing that happened to us because suddenly we see those institutional investors quickly pouring big money in the market. And a lot of newbies joined the hype trained that really fueled the price to pushed into its new all-time-highs. But, if you look at it in December, you will noticed the price was somewhat in a sideway after they joined, and got me thinking that something is not right. Oh well, we now see that it somehow backfired as we have seen the price plummeted till today.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

I don't see Coinbase news making another bull run, well, it could "pump" the price to that extent. But I think most of us learn the lessons during December. So I doubt that investors will suddenly jump again. Everyone will be cautious this time, we can see some money flowing but don't expect as big as the December rally though.

[amishmanish]

It's also possible that endowments, pensions, etc haven't entered the markets yet and will be doing so later this year. What effect, if any, that has on the markets is unclear.

Endowments, Pension funds etc. select only the most secured investments that are likely to give long term returns. They typically go with the investment ratings from agencies like S&P and Moody's.
Crypto is a volatile investment and they will be the last to do this.

What we all should take heart from is that this is nothing new. Such calm times are when developers can actually focus on the product and when,  we as a community, should focus on adoption. I understand that a lot of people who invested near ATH maybe getting scared and tense. The best course of action is to teach yourself about the technology and the opportunities and value your holdings for being bitcoin, not for an investment to cash-out fiat.The gains will come.

[Moon Assist]

Endowments, Pension funds etc. select only the most secured investments that are likely to give long term returns. They typically go with the investment ratings from agencies like S&P and Moody's.
Crypto is a volatile investment and they will be the last to do this.

Yes, they will be relatively late to get into the uncertain crypto markets. That time may be coming soon, however. Investment firms are reportedly getting requests from endowments and pension funds about how to get exposure to these markets and the custody infrastructure is now being established to allow for these institutional investors to take positions.

Even relatively small positions by institutional standards could be significant for young crypto markets. Any exposure to these markets is risky by institutional terms. So it's probably safe to assume that initial investments would be concentrated around the very highest market cap coins - BTC, ETH, LTC, BCH.

[Hydrogen]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

I don't know if volume was a first cause or a prime mover in the cause and effect of why bitcoin's value faded.

There were a series of central banks which sought to ban or illegalize bitcoin and crypto currencies. There were claims of tether printing $80 billion dollars of (usdt) out-of-thin-air to push artificially inflate bitcoin's price. Banks began to seek a role of "regulating bitcoin" in many nations economies. Banks began to roll out new features to make them more competitive against bitcoin.

Whatever positives there may have been in robinhood's financial platform gaining around 1 million new accounts after announcing crypto trading and coinbase reporting as much as 100,000 new sign ups in a day with statistics claiming the total number of crypto currency end users doubled every 16 months or so. It does seem as if the negatives could outweigh the positives, at least as they're being reported by the media.

I know I'm forgetting many of the important events in my summary, but I suspect negative anti crypto media spin and bankers revealing a more anti crypto stance could be bigger culprits than trading volume.

[Moon Assist]

I don't know if volume was a first cause or a prime mover in the cause and effect of why bitcoin's value faded.

Regardless of what effect institutional volume has had on bitcoin's value up until this point, much of that money that was expected to flood the markets has yet to do so. Endowments, pension funds, etc are not yet in bitcoin at scale and that, in part, is due to a lack of institutional infrastructure. It sounds like that infrastructure is coming, though. And it also sounds like the institutional guys are now interested in a bit of exposure to the crypto markets.

[cryptothief]

I think it is inevitable that institutions will be joining the cryptocurrency market, and the majority of this investment (at least to begin with) will be earmarked for Bitcoin only. This increase in investment, turning the current trickle into a flood, should see a sharp upturn in the Bitcoin price, possibly close to it's ATH before the end of the year.

https://www.newsbtc.com/2018/04/09/entrance-of-institutional-traders-in-mature-cryptocurrency-market-will-lead-to-bitcoin-price-surge/

Although I think that substantial increase is unlikely, the more probable scenario is a steady rise towards $13,000-15,000 as the market tests the various resistance points. Other cryptocurrencies will be able to ride this wave, but as opposed to last year when the market rose in unison, I think lower quality projects will start to feel the wrath of investors and fall by the wayside.

[Moon Assist]

https://www.newsbtc.com/2018/04/09/entrance-of-institutional-traders-in-mature-cryptocurrency-market-will-lead-to-bitcoin-price-surge/

Although I think that substantial increase is unlikely, the more probable scenario is a steady rise towards $13,000-15,000 as the market tests the various resistance points. Other cryptocurrencies will be able to ride this wave, but as opposed to last year when the market rose in unison, I think lower quality projects will start to feel the wrath of investors and fall by the wayside.

Thanks for sharing that link.

It's a good point that historically the market rose in unison. As the market matures, this pattern will break. And many of those lower quality projects that raised money in the bull market are hurting from this bear market and still without products released...

[jaysabi]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

These derivatives though weren't backed by the crypto itself, in that everything was cash-settled. Normally, if you're trading commodity futures and the contract you're holding expires below the contract price, you're legally obligated to take possession underlying commodity because you essentially have a contract that agreed to buy it at a specified price and at a specified time. The bitcoin futures are divorced from this in that they will only payout cash, not the underlying crypto asset, so all these futures are is a way for institutional money to also get in on the speculation but with the added feature of not actually participating in any of the supply and demand of the crypto. They're playing from the safety of regulated exchanges, which is one benefit though over crypto exchanges.

[Moon Assist]

All these futures are is a way for institutional money to also get in on the speculation but with the added feature of not actually participating in any of the supply and demand of the crypto.

As institutional sentiment shifts towards embracing this new asset class and custody solutions for institutions mean they are able to substantially enter the market, I think we will finally start to see institutions participate in the real action. Kingdom Trust, which has $12 billion in custody and is building out crypto custody solutions for institutions, was recently acquired by BitGo. That should be a signal of what's to come...

[jaysabi]

All these futures are is a way for institutional money to also get in on the speculation but with the added feature of not actually participating in any of the supply and demand of the crypto.

As institutional sentiment shifts towards embracing this new asset class and custody solutions for institutions mean they are able to substantially enter the market, I think we will finally start to see institutions participate in the real action. Kingdom Trust, which has $12 billion in custody and is building out crypto custody solutions for institutions, was recently acquired by BitGo. That should be a signal of what's to come...

I wouldn't discount institutional investors slowly dipping their toes in the water, but I don't expect anything overly significant to change. You have to look at who comprises institutional investors, and it's a lot of pension funds and retirement account managers. These have to be conservative by nature, because they're protecting people's futures they saved their entire lives to build. Bitcoin is going to be outside of the investment mandate of virtually all ERISA and 401k account managers because it's far too risky for the investment profile of the assets their managing. That leaves some aggressive and speculative institutional managers, but I still wouldn't count on anything significant in the short term. While not a prediction, it wouldn't surprise me to find 10 years down the line that there has been no meaningful institutional involvement in Bitcoin outside of private equity firms that have a crypto focus.

[DooMAD]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

These derivatives though weren't backed by the crypto itself, in that everything was cash-settled. Normally, if you're trading commodity futures and the contract you're holding expires below the contract price, you're legally obligated to take possession underlying commodity because you essentially have a contract that agreed to buy it at a specified price and at a specified time. The bitcoin futures are divorced from this in that they will only payout cash, not the underlying crypto asset

Correct, it's not quite right to say that futures/options have resulted in vast sums of the institutional money flowing "into" crypto.  Instead, it's just the same institutional money changing hands between the same institutional investors, effectively betting from the sidelines.  People just assume money is actually coming into crypto because they don't realise that derivatives trading usually impacts the price of the underlying asset.  It's entirely possible a small increase of actual Bitcoin trading has occurred, just not nearly as much as people would think reading all the headlines about it.

we as a community, should focus on adoption. I understand that a lot of people who invested near ATH maybe getting scared and tense. The best course of action is to teach yourself about the technology and the opportunities and value your holdings for being bitcoin, not for an investment to cash-out fiat.The gains will come.

Sage wisdom.  We should see acquiring bitcoins as a means to escape fiat, not to acquire more fiat.  If I relinquish ownership of my BTC, it's going to be for the purpose of buying something useful, not to sell for IOUs.  It's better to consider gains as "having greater purchasing power", rather than "having more of your national currency".

[Moon Assist]

While not a prediction, it wouldn't surprise me to find 10 years down the line that there has been no meaningful institutional involvement in Bitcoin outside of private equity firms that have a crypto focus.

Huh, this would certainly surprise me. In fact, I think a handful of governments may already be quietly accumulating...

[dothebeats]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

This is because most of the money are already in the coin and no one is insane enough to buy a huge amount of bitcoins at that price since the volume is showing that bitcoin and other crypto is already overbought. These launches mean nothing to be honest, as the top has already been priced in and most people are already waiting to bail out with or without the institutional investors chiming in. Unfortunately, most people still believed that the price would still continue for a push that lead to massive disappointments and losses.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

Big traders could capitalize on these news and might start making some hints that something is up, but this doesn't mean that we might see lucrative gains again just like what we've witnessed on 2017. Institutional money is already within the realms of the cryptomarket, it's just that it isn't publicized yet. If there are information regarding that, it's too little to be certain about. These guys know how to get a good position on every investment fad appearing, so before we all know it, they're already knee-deep in crypto before making the big announcements.

[marginal]

Whole world will go after the trens, right mow cryptocurrencies are the trend, so every other institution would anticipate a big money here and will try to participate, huh

[ylnar123]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

Precisely good observation with regards to the big eally last year. Seeing those big institutions pour out money for their investments but then again those people who invested first withdraw thier invest right after they see a big lift in the price of Bitcoin. With the solution in mind on coinbase, hopefully solve the problem on the fast drop and will help continue the bull run of cryptocurrencies.

[jaysabi]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

This is because most of the money are already in the coin and no one is insane enough to buy a huge amount of bitcoins at that price since the volume is showing that bitcoin and other crypto is already overbought. These launches mean nothing to be honest, as the top has already been priced in and most people are already waiting to bail out with or without the institutional investors chiming in. Unfortunately, most people still believed that the price would still continue for a push that lead to massive disappointments and losses.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

Big traders could capitalize on these news and might start making some hints that something is up, but this doesn't mean that we might see lucrative gains again just like what we've witnessed on 2017. Institutional money is already within the realms of the cryptomarket, it's just that it isn't publicized yet. If there are information regarding that, it's too little to be certain about. These guys know how to get a good position on every investment fad appearing, so before we all know it, they're already knee-deep in crypto before making the big announcements.

If the bolded bit above were true in any meaningful sense, we would know about it. Institutional investors have reporting requirements to their investors, and their holdings are heavily followed and reported on by the financial news media. If institutional investors were big into any crypto, we would already know about it. The fact that nobody can point to anything meaningful to me suggests this just isn't the case. It's actually far more likely that institutional investors aren't much interested in the underlying crypto assets anyway though, and are instead investing in the businesses that can make a profit off of crypto, like exchanges or financial services firms rooted in crypto. An asset that has value based on what everyone considers it be worth is far less compelling and far more risky than a business that actually offers a product or service and has a profit margin to investors, and we know fairly well who are the big backers and investors in crypto startups. That's where I see institutional money, not in the crypto assets themselves (for the most part).

[Moon Assist]

The fact that nobody can point to anything meaningful to me suggests this just isn't the case. It's actually far more likely that institutional investors aren't much interested in the underlying crypto assets anyway though...That's where I see institutional money, not in the crypto assets themselves (for the most part).

I agree with your first point that there are no significant signs of institutional money in crypto markets, yet. But I'm not sure you can extrapolate out the level of interest from these investors. The lack of infrastructure hasn't allowed us the opportunity to see how institutional investors react when given the chance to enter the markets. With upcoming custody solutions and some time, we'll find out.

[awawo]

Will to me the institutionalization of the bitcoin and the crypto currency community as a whole is against the motive behind the the creation of the digital currency because it intention is that crypto currency will remain decentralized and at that it will not be control by any person or government so that will redefine the primary purpose of creating the crypto currency and most especially bitcoin.

[Moon Assist]

Will to me the institutionalization of the bitcoin and the crypto currency community as a whole is against the motive behind the the creation of the digital currency because it intention is that crypto currency will remain decentralized and at that it will not be control by any person or government

Institutional money moving into crypto is not at odds with the idea of cryptocurrencies. If bitcoin matures to a point where it can compete with or replace fiat currencies, then institutions will choose to participate in this new financial system.

[Falmera]

The mega-rally towards the end of last year was, in part, due to things like CME & CBOE futures and LedgerX options launching. There was a sense that institutional money was about to get in the game and people wanted to front run that money. However, volume stayed relatively flat after those launches and new money didn’t flow in as much as some people expected.

Now, Coinbase is in the process of launching a custody solution and some other groups will be launching custody offerings later this year as well. This narrative that custody is right around the corner could reignite the news cycle around institutional money entering the space. Will institutionalization actually happen now? If people try to front run that money again, will we see a bull run this coming summer as these custody products get set to roll out?

I think it will affect the market as to coin's demand.Big investors with big investments might gain more. If that is happening today, well, in my opinion,  there will be a coming bull run.

[Moon Assist]

I think it will affect the market as to coin's demand.Big investors with big investments might gain more. If that is happening today, well, in my opinion,  there will be a coming bull run.

Exactly. There's demand that's sitting on the sidelines right now. The timing of that demand entering the markets should partly coincide with the shift from the bear market we're in to the next bull run. It's only been a few months of this current bear market, though.

[paynercash]

I do not know if it can be trusted?
It should be established that the availability of safe, non-border cash can be put to good use and it can open up different markets.
This will only be set when we start seeing more products and less scams. Then the market can be strong and have potential.