Institutional Money Observer

[gentlemand]

I thought it would be interesting to have a thread collating info regarding the heavyweight players entering Bitcoinland as I expect it to be a trend that's going to ramp up rapidly and these things often get lost in the noise.

Here's one to get the ball rolling - https://www.forbes.com/sites/michaeldelcastillo/2020/08/26/fidelity-president-files-for-new-bitcoin-fund

Fidelity have just filed for a new fund dedicated to Bitcoin. Few details as of yet but the train is clearly considering leaving the station.

What have you spotted out there?

[1714265563]

1714265563

[1714265563]

1714265563

[exstasie]

Here's one to get the ball rolling - https://www.forbes.com/sites/michaeldelcastillo/2020/08/26/fidelity-president-files-for-new-bitcoin-fund

Fidelity have just filed for a new fund dedicated to Bitcoin. Few details as of yet but the train is clearly considering leaving the station.

Is there anything that makes it fundamentally different (or more likely to attract volume) vs. VanEck's Bitcoin trust, which has been a total flop so far? https://www.vaneck.com/institutional/bitcoin-144a/overview

Not even a million USD in net assets yet!

Minimum $100K investment almost guarantees Fidelity's fund is just for accredited investors, but at least it might attract real liquidity that way.

I'm a lot more excited for something like an ETF that will be simultaneously accessible by mainstream retail investors. The post-pandemic market showed retail investors can be a very powerful force in the market.

[slaman29]

This one is a bit old (this year) but remember the rich dad poor dad guy? Kiyosaki. Yes, I know he doesn't seem like a heavyweight guy but my parents read his famous book and listened to him a lot, so if a guy like him says go Bitcoin, you have a whole generation of people who trust him and who might listen. Pension and retirement funds right there.

[bitgolden]

It is definitely a great help to see these big institutions getting into crypto, the way our economy works right now in crypto is the fact that we need buyers and who else would be more awesome than corporations who could buy into it in billions. Now, I know some people do not really like them because they are the reason why we got away from the fiat and they are the reason why regular financial system in the world doesn't work at all, but at the end of the day this is bitcoin and they can't ruin bitcoin because it is decentralized and nobody has power over bitcoin.

Could they change laws regarding crypto? Sure they can, but we come from being banned and everybody thought we were used for drugs and mercenaries so I doubt they could make it any worse, which means they are welcome here.

[gentlemand]

but at the end of the day this is bitcoin and they can't ruin bitcoin because it is decentralized and nobody has power over bitcoin.

While they can't touch the core of it, they certainly can screw with the price and acceptance. Fractional reserve/ paper Bitcoin is the one everyone's waiting for. They've never not done it in any other market so I can't see any reason why they'd make this a special case.

The difference between Bitcoin and everything else is that it's instantly verifiable and deliverable and anyone can store and trade it themselves. However it's pretty clear many people don't give a shit about that and Wall St will run with it.

[DeathAngel]

This could be a very interesting thread as the current cycle plays out. We possibly won’t see real institutional FOMO until 2021 but once they get interested it’ll be like a stampede. They are not going to want to miss out on bitcoin’s next crazy run.

[Juggy777]

This one is a bit old (this year) but remember the rich dad poor dad guy? Kiyosaki. Yes, I know he doesn't seem like a heavyweight guy but my parents read his famous book and listened to him a lot, so if a guy like him says go Bitcoin, you have a whole generation of people who trust him and who might listen. Pension and retirement funds right there.

@slaman29 yes I too have read his books and read his tweet about encouraging people to buy Bitcoins, but so far can’t see any major effect of his tweet on bitcoin prices.

This could be a very interesting thread as the current cycle plays out. We possibly won’t see real institutional FOMO until 2021 but once they get interested it’ll be like a stampede. They are not going to want to miss out on bitcoin’s next crazy run.

@DeathAngel considering the pandemic and economy crashing I believe that it’s only a matter of time before they turn their attention towards bitcoins, because even in this pandemic bitcoins has given good returns.

Sources:

https://www.reuters.com/article/us-health-coronavirus-bitcoin-graphic/speculative-bet-or-inflation-hedge-bitcoin-in-the-coronavirus-crisis-idUSKCN2232BE

https://cointelegraph.com/news/buy-bitcoin-before-major-banking-crisis-rich-dad-poor-dad-author

[Toxic2040]

I thought it would be interesting to have a thread collating info regarding the heavyweight players entering Bitcoinland as I expect it to be a trend that's going to ramp up rapidly and these things often get lost in the noise.

Here's one to get the ball rolling - https://www.forbes.com/sites/michaeldelcastillo/2020/08/26/fidelity-president-files-for-new-bitcoin-fund

Fidelity have just filed for a new fund dedicated to Bitcoin. Few details as of yet but the train is clearly considering leaving the station.

What have you spotted out there?

do we have IMOsMerits here? 

anyway....

+1 for the thread concept...I find this fascinating.


-------

Its hard to gauge institutional interest much of the time as I think most will take a position long before any type of announcement...for obvious reasons I would say.

That being said I do find it interesting that www.nasdaq.com has a entire page devoted to bitcoin(they are calling it cryptocurrencies but I think we all know what they mean)

https://www.nasdaq.com/news-and-insights/topic/markets/cryptocurrencies

A couple of articles of note.

https://www.nasdaq.com/articles/energy-giant-equinor-to-cut-gas-flaring-with-bitcoin-mining%3A-report-2020-08-28

Equinor is a state-owned multinational based in Norway and ranked as the 11th largest oil and gas firm globally.

This multinational is funding https://www.crusoeenergy.com/ and their DFM or digital flare mitigation technology.

https://www.prnewswire.com/news-releases/crusoe-energy-systems-announces-70-million-in-funding-for-expansion-of-digital-flare-mitigation-services-300970514.html

A interesting application and I can tell you from first hand experience that there are many many flare stacks out there.


This illustrates how I believe things will play out with many institutions at first. They will try to enter on the edges...into developing markets that can generate a position without directly purchasing large amouts OTC or on exchange. Others will pile on and a cascade event is likely to happen imo. Its only a matter of time.

[gentlemand]

do we have IMOsMerits here? 

No. They are explicitly excluded here because it breaks noob hearts when they figure out it doesn't raise their real figure. Poor mites.

Another thing I'm interested is whether money heads more towards the raw buying of the thing itself or prefers to continue to dance around it with infrastructure investment as much of it has done in earlier days.

There's got to be a point where you let go of 'blockchain not Bitcoin' in the face of gains comparing them. If we take Circle, they must have thrown away several hundred million dollars or more on shit investments since they entered in 2014 or whenever it was. I hope for their sake they owned some too but I wouldn't be surprised if they never did.

[exstasie]

but at the end of the day this is bitcoin and they can't ruin bitcoin because it is decentralized and nobody has power over bitcoin.

While they can't touch the core of it, they certainly can screw with the price and acceptance. Fractional reserve/ paper Bitcoin is the one everyone's waiting for. They've never not done it in any other market so I can't see any reason why they'd make this a special case.

The difference between Bitcoin and everything else is that it's instantly verifiable and deliverable and anyone can store and trade it themselves. However it's pretty clear many people don't give a shit about that and Wall St will run with it.

The problem with rehypothecation: Fidelity or another central counterparty can transparently keep 1M coins in a cold storage address, then pledge and re-pledge that collateral 2 or 3 times over. Nobody will be the wiser, but it will drastically inflate the number of "BTC" on the institutional market, suppressing spot prices through arbitrage. As long as very few traders are taking physical delivery at settlement (as is the case in most Wall Street commodity markets) this is a pretty handy way to keep a lid on prices.

At the same time, everyone will point to that 1M coin cold storage address and think it's totally legitimate (in terms of volume and market liquidity) that Wall Street is leading the spot market.

[gentlemand]

The problem with rehypothecation: Fidelity or another central counterparty can transparently keep 1M coins in a cold storage address, then pledge and re-pledge that collateral 2 or 3 times over. Nobody will be the wiser, but it will drastically inflate the number of "BTC" on the institutional market, suppressing spot prices through arbitrage. As long as very few traders are taking physical delivery at settlement (as is the case in most Wall Street commodity markets) this is a pretty handy way to keep a lid on prices.

Makes sense. I can't imagine any of them bothering with a proof of keys day, not even standard Bitcoin fans appeared to be arsed with that.

Presumably there's a legal requirement to declare your operation is carrying that out? Again, hardly anyone's gonna care since they're primarily pursuing dollars.

[bitserve]

but at the end of the day this is bitcoin and they can't ruin bitcoin because it is decentralized and nobody has power over bitcoin.

While they can't touch the core of it, they certainly can screw with the price and acceptance. Fractional reserve/ paper Bitcoin is the one everyone's waiting for. They've never not done it in any other market so I can't see any reason why they'd make this a special case.

The difference between Bitcoin and everything else is that it's instantly verifiable and deliverable and anyone can store and trade it themselves. However it's pretty clear many people don't give a shit about that and Wall St will run with it.

The problem with rehypothecation: Fidelity or another central counterparty can transparently keep 1M coins in a cold storage address, then pledge and re-pledge that collateral 2 or 3 times over. Nobody will be the wiser, but it will drastically inflate the number of "BTC" on the institutional market, suppressing spot prices through arbitrage. As long as very few traders are taking physical delivery at settlement (as is the case in most Wall Street commodity markets) this is a pretty handy way to keep a lid on prices.

At the same time, everyone will point to that 1M coin cold storage address and think it's totally legitimate (in terms of volume and market liquidity) that Wall Street is leading the spot market.

That is until one player decides to take advantage of the blockchain features and regularly publish a pseudoanonymous audit that serves to pinpoint exactly which of those cold wallet coins are yours. Something that it is technically very easy to implement. Yet no exchange has decided to do it... so maybe we are already having that rehypotecation/fractional reserve issue?

[exstasie]

The problem with rehypothecation: Fidelity or another central counterparty can transparently keep 1M coins in a cold storage address, then pledge and re-pledge that collateral 2 or 3 times over. Nobody will be the wiser, but it will drastically inflate the number of "BTC" on the institutional market, suppressing spot prices through arbitrage. As long as very few traders are taking physical delivery at settlement (as is the case in most Wall Street commodity markets) this is a pretty handy way to keep a lid on prices.

At the same time, everyone will point to that 1M coin cold storage address and think it's totally legitimate (in terms of volume and market liquidity) that Wall Street is leading the spot market.

That is until one player decides to take advantage of the blockchain features and regularly publish a pseudoanonymous audit that serves to pinpoint exactly which of those cold wallet coins are yours. Something that it is technically very easy to implement.

That would be a drastic change to how accounting is done on Wall Street. It would also threaten the model by which the ICE (the parent company of Bakkt) and similar central counterparties make money:

Rehypothecation and commingling are major components of how CCPs make money—if they did neither, CCPs would need to charge clients a lot more money for the risks they assume. Plus, there are fat profit margins in rehypothecating collateral, especially for types of assets that are “hard to borrow” or trade “special.” Bitcoin is the epitome of “hard to borrow,” owing to its natural scarcity and because so many of the 17 million outstanding bitcoins are squirreled away in cold storage. It’s clear why CCPs want in.

For that reason, I'm pessimistic about the whole matter, and I expect Wall Street custodians like Bakkt to artificially inflate the supply. It doesn't have to be some conspiracy to keep prices down either. It's just how the system is set up. They have every incentive to pledge and re-pledge collateral as much as possible.

[beerlover]

That is fine though, if people are fine about using the same bitcoin over and over again on paper they will be super rich, however this is not fiat, they can't just bankrupt and get away with it, or they can't just ask someone to give them more, basically there is a limited amount, so if they just go too above, they will crash and they will definitely not be able to pay everyone back because they have more bitcoin outstanding on their accounts than what they really have on their wallets.

Bitcoin is not fiat and it would not be kind to them, it doesn't care if you are super rich, it doesn't care if you go down millions go down, it will destroy you if you try to do anything that it doesn't do, you just have to follow up as a company and respect what bitcoin is all about if you do not want to be destroyed.

[gentlemand]

Bitcoin is not fiat and it would not be kind to them, it doesn't care if you are super rich, it doesn't care if you go down millions go down, it will destroy you if you try to do anything that it doesn't do, you just have to follow up as a company and respect what bitcoin is all about if you do not want to be destroyed.

Even people who've been in Bitcoin for years, and often from the near beginning, eventually attempt to impose their will on it and wind up getting pounded in the butthole. I'm sure institutional types will try the same and reach the same conclusion. Let's hope they don't use the money of others to make their failed stand.

[exstasie]

Even people who've been in Bitcoin for years, and often from the near beginning, eventually attempt to impose their will on it and wind up getting pounded in the butthole. I'm sure institutional types will try the same and reach the same conclusion.

I'm slightly worried about the opposite scenario, where institutional trading is extremely high volume and sufficiently arbitrages the spot market through physical delivery or open-ended share redemption.

Markets tend to follow the highest volume exchanges. This is where practices like rehypothecation come in, because they amplify liquidity and volume, and this will become especially true once we start seeing leveraged instruments on Wall Street that are physically backed or delivered.

If Wall Street dominates the spot market in terms of volume, the spot market may become a slave to it.

[gentlemand]

If Wall Street dominates the spot market in terms of volume, the spot market may become a slave to it.

I think it's given they're going to wind up being extremely influential over price, if not commanding it. I was thinking more along the lines of actual control of the protocol itself. I wouldn't be surprised if we got a supercharged S2X at some point. Perhaps they won't find it necessary if they're pure paper but Bitcoin's nature is not a scenario they're in any way used to.

Even then it's easy for Americans to forget there's an actual world outside and this will trade all over it 24/7. There may be some surprise powerhouses that emerge. It may be seized by swarthy foreigners as an opportunity to show some muscle.

[Toxic2040]

That is fine though, if people are fine about using the same bitcoin over and over again on paper they will be super rich, however this is not fiat, they can't just bankrupt and get away with it, or they can't just ask someone to give them more, basically there is a limited amount, so if they just go too above, they will crash and they will definitely not be able to pay everyone back because they have more bitcoin outstanding on their accounts than what they really have on their wallets.

Bitcoin is not fiat and it would not be kind to them, it doesn't care if you are super rich, it doesn't care if you go down millions go down, it will destroy you if you try to do anything that it doesn't do, you just have to follow up as a company and respect what bitcoin is all about if you do not want to be destroyed.

This could be a contributing factor for slow legacy market(read institutional) adoption. They are habituated on control of markets and entering one that is outside of their typical manipulation tactics scares them.

Even people who've been in Bitcoin for years, and often from the near beginning, eventually attempt to impose their will on it and wind up getting pounded in the butthole. I'm sure institutional types will try the same and reach the same conclusion.

I'm slightly worried about the opposite scenario, where institutional trading is extremely high volume and sufficiently arbitrages the spot market through physical delivery or open-ended share redemption.

Markets tend to follow the highest volume exchanges. This is where practices like rehypothecation come in, because they amplify liquidity and volume, and this will become especially true once we start seeing leveraged instruments on Wall Street that are physically backed or delivered.

If Wall Street dominates the spot market in terms of volume, the spot market may become a slave to it.

Been thinking about the volume 'factor' a bit lately..and will be the first to concede that it has played a significant role on my interpretation of where the bitcoin market is heading. After some further contemplation, I believe as the price goes up we will see a continued decline in this metric due to the fact it will take less coin at higher prices to achieve the same objectives. Perhaps my hypothesis has a fundamental flaw as it might be offset with more players using smaller amounts..will just have to wait and see how it plays out.

[bearexin]

The real big thing will be one day bloomberg type of channels and so forth having a crypto specific show, it could be early morning, it could be late night, it could be even 3 am I don't care but if there is crypto specific that would be awesome because those people are listened by the wall street people and when they say something wall street people will listen.

After that the step is to make sure wall street huge companies having crypto space, if they actually do that and invest tens of billions of dollars all together, that means they will actually end up with a ton of profit because they will increase the profit themselves but we will also get a lot more professional look from the world instead of what we are right now (and we would be super rich thanks to them as well ) .

[exstasie]

If Wall Street dominates the spot market in terms of volume, the spot market may become a slave to it.

I think it's given they're going to wind up being extremely influential over price, if not commanding it. I was thinking more along the lines of actual control of the protocol itself. I wouldn't be surprised if we got a supercharged S2X at some point.

This brings up an interesting question. Let's say Fidelity ends up with a huge chunk of the Bitcoin supply, like 10-20% of it, and then they get hacked.

It wouldn't be like Binance musing about a rollback after getting hacked for 7K coins. I'm talking millions of coins, owned by very, very powerful people. Governments could also heavily influence the outcome of a fork by legally approving one (the rollback chain) and not the other.

What happens then? The original chain would no doubt survive, but would it be the dominant chain? I wonder.

Been thinking about the volume 'factor' a bit lately..and will be the first to concede that it has played a significant role on my interpretation of where the bitcoin market is heading. After some further contemplation, I believe as the price goes up we will see a continued decline in this metric due to the fact it will take less coin at higher prices to achieve the same objectives. Perhaps my hypothesis has a fundamental flaw as it might be offset with more players using smaller amounts..will just have to wait and see how it plays out.

You could be right, but this dynamic would apply across the whole market. It wouldn't make Wall Street any less influential on price, would it?

High frequency trading is also the norm on Wall Street. They could generate significant volume churn.

[philipma1957]

If Wall Street dominates the spot market in terms of volume, the spot market may become a slave to it.

I think it's given they're going to wind up being extremely influential over price, if not commanding it. I was thinking more along the lines of actual control of the protocol itself. I wouldn't be surprised if we got a supercharged S2X at some point.

This brings up an interesting question. Let's say Fidelity ends up with a huge chunk of the Bitcoin supply, like 10-20% of it, and then they get hacked.

It wouldn't be like Binance musing about a rollback after getting hacked for 7K coins. I'm talking millions of coins, owned by very, very powerful people. Governments could also heavily influence the outcome of a fork by legally approving one (the rollback chain) and not the other.

What happens then? The original chain would no doubt survive, but would it be the dominant chain? I wonder.

Been thinking about the volume 'factor' a bit lately..and will be the first to concede that it has played a significant role on my interpretation of where the bitcoin market is heading. After some further contemplation, I believe as the price goes up we will see a continued decline in this metric due to the fact it will take less coin at higher prices to achieve the same objectives. Perhaps my hypothesis has a fundamental flaw as it might be offset with more players using smaller amounts..will just have to wait and see how it plays out.

You could be right, but this dynamic would apply across the whole market. It wouldn't make Wall Street any less influential on price, would it?

High frequency trading is also the norm on Wall Street. They could generate significant volume churn.

18 mill x 12 k = 216 billion

My guess is it they acquire

3.6 mill coins price will be huge.

Most coins sit still

maybe 6 mill circulate and 12 mill sit and do nothing

trying to buy 3.6 mill of 6 mill = nice price spike.

Plus they won't have much control with only 3.6 mill coins.

[cryptomaniac_xxx]

How about this one guys?

Major European Stock Exchange Lists First Bitcoin Product.

Wiener Börse, one of the largest Central Europe-based stock exchanges, today listed its first cryptocurrency product. While this appears like a strong adoption signal, these exchange-traded products (ETPs) might also be the latest event in a growing trend that ultimately devalues cryptocurrency, regional experts say.

Issued by Swiss-based fintech firm 21 Shares AG, this single-asset product, which will trade under the ticker symbol ABTC, seeks to track both the investment results of Bitcoin, the world’s largest cryptocurrency by market capitalization, and its second-place contender, Ethereum.

In other words, Wiener Börse clients will now be able to get exposure to cryptocurrency from a regulated trading platform, without having to directly buy the cryptocurrency on their own.

Could this be a good news, especially if you are EU based, they now have a chance to join on the crypto (bitcoin) bandwagon before it goes full blown in 2020.

[600watt]

https://www.forbes.com/sites/christopherbrookins/2020/08/14/microstrategy-just-sent-green-light-to-corporate-america-on-bitcoin/#6d8d8c526bc4

does this count as institutional investors? before this stunt I did not even know that companies could invest their capital stock in bitcoin. they put in 50% of what they have. I think this is maybe the single best news regarding bitcoin this year.

[gentlemand]

does this count as institutional investors? before this stunt I did not even know that companies could invest their capital stock in bitcoin. they put in 50% of what they have. I think this is maybe the single best news regarding bitcoin this year.

Maybe I should've defined the terms or renamed it. I'd say any legacy money becoming a fellow Bitcoin shill should count and that certainly does. They've been around a for a long time. And any legacy operation offering platforms for the little people should count too.

[jostorres]

Yeah, people who are basically good old fashion wall street type (doesn't really need to be in wall street, just that type) should definitely be considered institutional money. I believe this is why the last link was definitely acceptable. It is really shocking to see these people in crypto, are we doing something wrong?

I mean the whole point of crypto was to get finance out of these rich peoples monopoly and allow a level playing field for everyone, if they are getting in anyway, does that mean they accepted defeat (which they rarely ever do) or are we making bitcoin to be something more like money once again? If that is so and if they are liking bitcoin because we are doing something wrong, that is really scary, I would rather fix that before I want institutional money to be in here.

[600watt]

there is definitely some institutional action in the bitcoin space.

On Oct. 8, right on cue, mobile payments giant Square, which boasts a market cap of $86.6 billion, announced that it had invested $50 million in Bitcoin (BTC). Five days later, asset manager Stone Ridge Holdings, which manages over $10 billion in assets, disclosed that it had purchased more than 10,000 BTC, worth around $114 million, as part of its treasury reserve strategy.

They both followed MicroStrategy, a Nasdaq-listed asset manager, which made known last month that it had accumulated $425 million in Bitcoin, making BTC the principal holding in its treasury reserve strategy.

i don't think Microstrategy is an asset manager, it is a software company for business intelligence.

https://cointelegraph.com/news/the-next-big-treasure-corporations-buy-up-bitcoin-as-a-treasury-reserve




here is a website that collects the data of corporate treasures that include bitcoin:


https://bitcointreasuries.org


there are already 13 public traded companies, 1 private and 6 "etf-like" that have invested almost $7billion and hodl 620030 btc which is 2.95% of all btc

[gentlemand]

https://www.cryptoglobe.com/latest/2020/10/singapores-largest-bank-launches-its-own-crypto-exchange/

SE Asia's largest bank by assets was about to launch an exchange solely for institutions and market makers.

Then they pulled the plug as it wasn't ready. One to watch if they plug it back in at any point.

[thecodebear]

Yeah, people who are basically good old fashion wall street type (doesn't really need to be in wall street, just that type) should definitely be considered institutional money. I believe this is why the last link was definitely acceptable. It is really shocking to see these people in crypto, are we doing something wrong?

I mean the whole point of crypto was to get finance out of these rich peoples monopoly and allow a level playing field for everyone, if they are getting in anyway, does that mean they accepted defeat (which they rarely ever do) or are we making bitcoin to be something more like money once again? If that is so and if they are liking bitcoin because we are doing something wrong, that is really scary, I would rather fix that before I want institutional money to be in here.

Why is it shocking that wealthy people would want bitcoin? Bitcoin wasn't made to keep money out of rich people's hands. There is nothing in bitcoin that prevents people from owning it. Any person, company, institution, bank, government can own as much bitcoin as they want and can afford.

Bitcoin was about creating a supply capped, frictionless, native digital currency in contrast to the legacy inflation-based, gate-keeper controlled, non-natively digital money system that exists in the banking network.

More adoption is more adoption. Do you really care who owns bitcoin as long as you own some, as long as you can spend it, as long as its market dynamics are positive, as long as it remains functional, as long as there are good on-ramps and off-ramps between it and fiat currencies? I can tell you, as long as those things remain true, I could care less who owns what amount of bitcoin, other than making sure I own plenty! If one day some hedge fund owns millions of bitcoin all by themselves, why do I care - they helped make me rich and bitcoin still works, I would thank them, not be worried about it.

Bitcoin is for everyone. Not only for non-rich people. It is a system that works for everyone. It wasn't meant to be kept out of the hands of the rich, it was meant to level the playing field as a transactional currency. If you have internet you can own bitcoin and use its transaction network. You don't need a bank, you don't need a credit card, you don't need your money to pass through gate keepers. It's got nothing to do with rich vs non-rich.