This rally is driven by institutional investors - what are the implications?

[hatshepsut93]

Let's assume that it's like this article says and this rally is institutionally-driven. What does it mean for Bitcoin? Will this bring us to some very high price levels, like hundreds of thousands, or are these experienced investors going to take the profits rather soon and crash the rally at barely establishing the new ATH, or in worst case, we won't even cross $20k. Can you say that institutional investors trade significantly differently from retail investors on a volatile and speculative market?

[1715380939]

1715380939

[1715380939]

1715380939

[1715380939]

1715380939

[1715380939]

1715380939

[Tytanowy Janusz]

Every bubble has to have its own paradigm. No one, who already burned his fingers on last bubble will invest again without new story. 2017 bubble was backed by "bitcoin - new whole world money that will replace fiats". Old paradigm faced high fees/scalability issue and bitcoin bubble bursted. Then we had alt season - XRP, LTC and many more "faster coin with better scalability than bitcoins was being pumped (alt season paradigm - be better than BTC in terms of speed). Then money floated to all crypto market.

Now we see creation of new paradigm - Bitcoin as part of well diversified portfolio.

It seems to me that this may be the basis for the creation of a new paradigm on the basis of which the next bitcoint bubble will be based.

According to the newest Fidelity* paper "BITCOIN INVESTMENT THESIS BITCOIN’S ROLE AS AN ALTERNATIVE INVESTMENT" - Bitcoin is an "alternative asset" not related/connected to other assets and is a great hedge against them - in case of their failour. They suggest building diversified portfolio in a way that min 5% of it is allocated in Bitcoin.

Fidelity - "It is one of the largest asset managers in the world with $3.3 trillion in assets under management as of June 2020 and a combined total customer asset value number of $8.3 trillion"


If they will apply this strategy into their portfolio than 5% from $8.3 trillion is equal to $ 415 bilion. Marketcap of Bitcoin is equal $ 240 billion. So there is not enough bitcoins only for them (at current price).

This paradigm is just in creation stage. The foundations for the next pump are being created in front of our eyes. This will not be dumped right after new ATH. It will be dumped on retail investors right after you will hear from your aunt/uncle during family diner that he is spending 10% of his income on bitcoin as pension fund for retirement. That's how bubbles work. But this time ... bitcoin will leave alts behind and even if we will see alt season too it will be much weaker than in 2018.

[NeuroticFish]

Let's assume that it's like this article says and this rally is institutionally-driven.

Indeed, there are pretty clear signals about institutional investors getting big into Bitcoin.
But I also somehow doubt that the institutional investors are playing with the markets during the week-end.  
So it's not only institutional investors there, that's clear.
Bitcoin went to 20k before and institutional investors were much fewer back then (I think).

What does it mean for Bitcoin? Will this bring us to some very high price levels, like hundreds of thousands, or are these experienced investors going to take the profits rather soon and crash the rally at barely establishing the new ATH, or in worst case, we won't even cross $20k. Can you say that institutional investors trade significantly differently from retail investors on a volatile and speculative market?

As I said, 20k was reached with less institutional investors.
Now, with them present, a new ATH is a matter of time. I won't say how bit it'll be, but it may be really big.
Just keep something also in mind: institutional investor may also become very big speculators and may play (us) big with price ups and downs. But since this has also happened already without them I'd say I don't expect anything different on short-medium term.

The only difference I expect is on long term and that should be much higher level of price and much lower price volatility.

[hatshepsut93]

As I said, 20k was reached with less institutional investors.
Now, with them present, a new ATH is a matter of time. I won't say how bit it'll be, but it may be really big.
Just keep something also in mind: institutional investor may also become very big speculators and may play (us) big with price ups and downs. But since this has also happened already without them I'd say I don't expect anything different on short-medium term.

The only difference I expect is on long term and that should be much higher level of price and much lower price volatility.

But this time retail investors aren't coming en masse, so there's a scenario where a new ATH won't come. I can totally imagine guys from Microstrategy selling all their coins at $18k, because getting 80% profit in a few months is already crazy good. Institutional investors, unlike many retail investors, who are often noobs, understand that this market is prone to bubbles, so it's important to take profit fast, before the bubble has popped.

[CyberKuro]

As I said, 20k was reached with less institutional investors.
Now, with them present, a new ATH is a matter of time. I won't say how bit it'll be, but it may be really big.
Just keep something also in mind: institutional investor may also become very big speculators and may play (us) big with price ups and downs. But since this has also happened already without them I'd say I don't expect anything different on short-medium term.

The only difference I expect is on long term and that should be much higher level of price and much lower price volatility.

But this time retail investors aren't coming en masse, so there's a scenario where a new ATH won't come. I can totally imagine guys from Microstrategy selling all their coins at $18k, because getting 80% profit in a few months is already crazy good. Institutional investors, unlike many retail investors, who are often noobs, understand that this market is prone to bubbles, so it's important to take profit fast, before the bubble has popped.

Institutional-investors considerably influence the price of bitcoin to rise since they announced bitcoin purchases.
They can sell it at any point, whether at $18K or $20K but the cash flow into bitcoin market will always continue to increase over time.
However, Microstrategy adopt bitcoin as the primary treasury reserve asset, the CEO; Michael Saylor claimed that he didn't buy bitcoin to sell it. read more
Saylor also said that BTC is the best asset to be invested in, calling it “the only thing we can find with a positive real yield.” source

[Fortify]

If the "institutional investor" swing is true, then they will be in it for the long haul and want to hold as much as possible while constantly buying more. There will be sporadic profit taking, usually as they need to cash out assets for particular clients, but in general they are not going to be "day trading" for profits like most retail investors will be doing. These sorts of institutions are what the mega rich use to hold and store their money, in some cases they are not even expecting a profit as we understand it - they'd just be happy not to have their money eroded by natural inflation each year. The people with that sort of cash around them are generally just accumulating more assets each year and if that money can now be allocated to bitcoin the price ceiling will be very high.

[Febo]

Let's assume that it's like this article says and this rally is institutionally-driven. What does it mean for Bitcoin? Can you say that institutional investors trade significantly differently from retail investors on a volatile and speculative market?

If more institutional investors buy Bitcoin that will mean that there will be more whales owning Bitcoin. Whales have chance to manipulate market. It will be a reason less to be a trader.

[carter34]

My speculation about the hype or surge is that a time will come when it will get less volatile. If the bull is as from institutional investors, they can be expecting that price will hit a new ATH before either taking out profit and cashing out. The ATH was last in 2017 and that was in 3 years ago, so maybe a record wants to be created again .

[NeuroticFish]

But this time retail investors aren't coming en masse, so there's a scenario where a new ATH won't come. I can totally imagine guys from Microstrategy selling all their coins at $18k, because getting 80% profit in a few months is already crazy good. Institutional investors, unlike many retail investors, who are often noobs, understand that this market is prone to bubbles, so it's important to take profit fast, before the bubble has popped.

They will come. Retail "investors" coming "en masse" will happen when the FOMO sentiment will be more powerful. A little more continuous growth and that may happen (again).
Also you seem to have forgotten PayPal, which allows in US to "buy Bitcoin" and will do the same in a couple of months for the rest of the world. I know it's only IOUs actually, but it will bring Bitcoin to the masses.
I think that we are on the right track and all we need now is a little more patience.

[jossiel]

My speculation about the hype or surge is that a time will come when it will get less volatile.

The speculation that I have for this matter is that we will see it in due time but not in the upcoming years. I think if most of the institutions in the world have invested in bitcoin and that time will come which it's likely to have its lesser volatility.

But going to that point is that it's unlikely. Bitcoin is known to be a very volatile asset and these institutions would also do something before other cash out their profits. It's like a game who's going to be quicker in taking profits when we have a higher price or newer ath.

[Poker Player]

Can you say that institutional investors trade significantly differently from retail investors on a volatile and speculative market?

I think they are not going to trade much. They are buying just to have a reserve asset against inflation so in most cases they are going to just buy and hold. See MicroStrategy CEO, for example: Michael Saylor claims the company will hold Bitcoin for ‘100 years’ .

[cabron]

It surprises some people who strongly oppose Bitcoin for they see it as a scam but when they see that institutional investors come in, they are now looking into the technology.  I think the bubble of the crypto cause by the institutional investors will be much bigger and it's going to be difficult to identify the ATH because it might just stick for a very long time.

The bubble will pop when the government finally crackdown on taxes but the implication of institutional investors holding BTC I guess is that it legitimized Bitcoin to the media and public. 

[freedomgo]

I have already read a lot with that kind of stuff, bullish articles keep popping up when the market is bullish, so it's not really a big deal, jut believe what you believe and act on it. For me, this could still be a manipulation going on or let's say there's an institutional investors coming in, but would that result to crazy increases? I doubt so.

[bitgolden]

I believe as long as institutional investors continue to keep this up, they are going to actually get a lot better results because them coming in means a lot of increases and a lot of increases means they will come even more in bunches. So it is an endless cycle, more money coming into bitcoin makes bitcoin go up and bitcoin going up makes more money coming in, that is just how market works.

However the implications would be if one day they stop, that means this sudden influx of money will be gone and the price wouldn't be able to go up like it does right now which would make it harder for to stay up and if it starts to go down and if institutional money leaves because of it, it could trigger just the opposite and market could crash, so we need to be careful about it in any case.

[figmentofmyass]

But this time retail investors aren't coming en masse, so there's a scenario where a new ATH won't come.

why would retail investors be coming en masse? that doesn't happen until much later, during the bubble. remember 2017? the media was silent during the whole 2015-16 bull market, until bitcoin passed the 2013 ATH. then CNBC and forbes started hyping bitcoin every day of the week. then i started getting phone calls from family members asking about bitcoin.....

that's how markets usually work: institutions quietly buy in the beginning stages of bull markets while retail investors are sleeping, then they dump their bags on retail buyers at much higher prices after the bull market has already played out. this is a common exit strategy for institutional investors. retail investors tend to be emotional/greedy and they tend towards fomo buying without any exit strategy. that's why they usually begin entering the market en masse after exponential gains have already occurred. retail buyers = top buyers.

I can totally imagine guys from Microstrategy selling all their coins at $18k, because getting 80% profit in a few months is already crazy good.

get a load of this: Michael Saylor claims the company will hold Bitcoin for ‘100 years’

[bitbunnny]

Let's assume that it's like this article says and this rally is institutionally-driven. What does it mean for Bitcoin? Can you say that institutional investors trade significantly differently from retail investors on a volatile and speculative market?

If more institutional investors buy Bitcoin that will mean that there will be more whales owning Bitcoin. Whales have chance to manipulate market. It will be a reason less to be a trader.

I don't think whales have so important role, in fact I think that too much power is in theory given to them compared to real situation.
It's also just a theory, a hypothesis that this Bitcoin rally is driven by institutional investors. I don't like to speculate about such outcomes when there isn't any ground to support it.

[batang_bitcoin]

I have already read a lot with that kind of stuff, bullish articles keep popping up when the market is bullish, so it's not really a big deal, jut believe what you believe and act on it. For me, this could still be a manipulation going on or let's say there's an institutional investors coming in, but would that result to crazy increases? I doubt so.

Yes. They pop out when the market goes bullish and they're also bearish when the market is bearish. And that's what they have to do, they can't twist the actual market if the market is bullish or bearish. IIRC, a year ago there were speculations about institutional investors are getting in. I don't know if that happened for a reason or insider or they've just predicted it well and they already saw it coming.

[STT]

People say investors but they would be involved in crypto operations and regular companies not just the rare commodity if they were serious investors and there are people like that but the vast majority of involvement is trading.    If volatility is a possibility and profits have to be booked for quarterly gains and taxes and pay outs and so on then sell offs are quite possible and the 'investment' will never be one way but a process that runs in cycles.
    I'm way more bullish on underlying growth of actual users and its ironic that the smallest involved users will typically keep a larger amount longer term in a wallet because of the hassle to sell, vs the hedge fund who can easily pull out millions whenever they want in order to capture the top dollar price.    The implication of big money involvement is trading practises becomes more common in crypto and we are altered by the strength of the dollar more so as most mainstream trade comes via cheap dollar flows.   The idea of cheap money is ultimately fake, I dont know how long it continues but its certain to encounter upsets and disorderly markets isnt a memory but the future also, imo with greater occurrence.

[wxa7115]

Let's assume that it's like this article says and this rally is institutionally-driven. What does it mean for Bitcoin? Will this bring us to some very high price levels, like hundreds of thousands, or are these experienced investors going to take the profits rather soon and crash the rally at barely establishing the new ATH, or in worst case, we won't even cross $20k. Can you say that institutional investors trade significantly differently from retail investors on a volatile and speculative market?

Institutional investors are whales, so it is unlikely they are thinking about this as a short term project, for them this is a long term manoeuvre, what we have been seeing during the last months is an accumulation period in which institutional investors have been buying a lot of bitcoin, but are they still buying bitcoin for a price above 15k? It does not seem to be the case.

It seems to me that what they are expecting is that retail investors begin to invest all what they have in bitcoin seeing how close it is to the previous ATH and then once a bubble forms after bitcoin surpasses the 20k level they will wait a little bit and then dump their coin on the market.

[SquallLeonhart]

I disagree that this rally was driven by institutional investors. I agree that they bought over a billion dollars worth of bitcoin in span of few months, but before the rally started they already bought most of their investments, they were already there.

Grayscale and microstrategy and places like that already bought a ton of bitcoin when it was 10k, they didn't increased the price at that time, why should they increase it today?

I think they were a good news and we liked the idea that companies are buying into bitcoin right now, but the reality is that they weren't increasing the price themselves, neither their news did because when we first heard it the price was 10k and stayed that way for almost 2 months. I can't give you the real reason because I don't know, but institutional investors going into bitcoin at 10k and suddenly 2 months later price increasing can't be all that much connected to each other.