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

[hatshepsut93]

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.

I don't think that being an institutional investor an a whale instantly means that they are for long term, in fact these people aren't buying Bitcoin because they believe in "HODL" or its technology, they simply care for profit. If their analysis will say that Bitcoin is going down, they will dump it without any second thoughts, they aren't emotionally attached to it, unlike many retail investors.

[Bergluft]

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.

What are the indications that institutional investors are not buying anymore?

[buwaytress]

Think I remember Coindesk's headline last week shouting FOMO's back, but then follow up news suggested very little movement on retail side. So maybe, maybe, but I also believe the institutional narrative has lost its lustre ever since derivatives were hyped, arrived, and then practically died on arrival (we all remember the breaths we held for Bakkt, don't we?).

Have we considered that this rally could actually be... organic? Force of nature and all that?

[exstasie]

Think I remember Coindesk's headline last week shouting FOMO's back, but then follow up news suggested very little movement on retail side. So maybe, maybe, but I also believe the institutional narrative has lost its lustre ever since derivatives were hyped, arrived, and then practically died on arrival (we all remember the breaths we held for Bakkt, don't we?).

Have we considered that this rally could actually be... organic? Force of nature and all that?

If institutions are driving the rally, it would still be organic. It would still just be supply and demand playing out, whether demand is predominantly coming from retail or institutional investors.

Richard Wyckoff's market theories touch on this dynamic. In a bullish accumulation schematic, the big boys absorb all the supply at the bottom of a bear market. Then once that supply dries up, price gets marked up into a new trading range. This establishes a bull market, as all the sellers and shorters from the bear market become trapped at lower levels. They drive prices higher, which gets the attention of retail buyers. Price rises until the big boys start distributing all their supply to late buyers. Then the market enters a distribution schematic and price gets marked down.

Some might call this "manipulation" just because it means institutions move the market just by virtue of their size. I would call it organic supply and demand though.

As for Bakkt, I don't think it's been a disappointment. They had their ATH in volume in September, and looking at the moving average, volume has been growing. https://twitter.com/BakktBot/status/1326528928924770306

[hatshepsut93]

Have we considered that this rally could actually be... organic? Force of nature and all that?

No one is saying that's it's a result of manipulation, institutional investment doesn't mean that it's some pump and dump scheme, it's just referring to the type of investors.  Every investor wants to buy low and sell high, so there nothing wrong with institutions buying Bitcoin to later sell it. I'm just curious what differences are there between them and retail investors, and how it could shape this rally, compared to the previous ones, that were mostly retail-driven.

[LUCKMCFLY]

I think it can be real, although when institutional money enters the market it always generates a lot of pump, and this rise in the price of Bitcoin has been maintained, investors may be putting more money into the market, and if it happens that way it means that it is very difficult to determine what type of money is coming in, if by Institutional or traditional Investors, speculators who want to move the market. There is no indicator or tool that specifies what kind of money is injected.

The most that can be studied is having a consolidated Volume, and the Exchanges do not have the consolidated volume, but the volume per specific Exchange. Some Strong Hands if they can have the consolidated volume, to have a better understanding of the market, but many theories have to be applied to determine them, one who was very expert in determining this type of behavior was Jesse Livermore.

[adaseb]

Institutions have been investing with bitcoin all year long. I think its more that we get closer and closer to the ATH, that more and more people start to realise that, we might eventually break $20K and head to like $100K or higher. Basically went we broke $1K back in 2017, we did 20x, and people are pretty much expecting a similar move. Maybe not a 20x which would put us at $400,000 per coin but something like $50K or so.

So the stock market is getting kind of toppy with stocks like Zoom, or Tesla already starting to get extremely expensive and eventually will run out of retail buyers. Where will these people go next? Most likely Bitcoin. Now that Paypal accepts people to buy BTC, most people already got a Paypal account, they can easily buy some BTC without having to open a exchange account. Hence why every thousands that we get closer and closer to $20K, there will be more and more buying pressure.

[yhiaali3]

Bitcoin was in a good position even before the existence of institutional investors and I think it will remain so, it is certain that they will try to take advantage of the existing situation in their favor and it is possible to reap their profits and run away but I doubt that Bitcoin will be affected greatly, as I told you I think that Bitcoin was and will remain Standing well with or without them and they are sure to play a huge role in raising Bitcoin to new levels of ATH.

[STT]

Mainstream involvement on this scale means more reference to dollar I reckon, it always there but almost any company has a leverage element to its cashflow and asset management.  The theory with QE is their intention always to keep inflation at target of 2% or so, which means they try avoid any large pull back but I think hitches and volatility is unavoidable from a false market they deliberately are trying to create.    So long as the dollar never rises too much I'd guess BTC is ok but I keep an eye on that measure breaking out of its range sideways its had for a while, again recently it hit and rose from the bottom of that range as I see it.

[buwaytress]

If institutions are driving the rally, it would still be organic. It would still just be supply and demand playing out, whether demand is predominantly coming from retail or institutional investors.

Richard Wyckoff's market theories touch on this dynamic. In a bullish accumulation schematic, the big boys absorb all the supply at the bottom of a bear market. Then once that supply dries up, price gets marked up into a new trading range. This establishes a bull market, as all the sellers and shorters from the bear market become trapped at lower levels. They drive prices higher, which gets the attention of retail buyers. Price rises until the big boys start distributing all their supply to late buyers. Then the market enters a distribution schematic and price gets marked down.

Some might call this "manipulation" just because it means institutions move the market just by virtue of their size. I would call it organic supply and demand though.

As for Bakkt, I don't think it's been a disappointment. They had their ATH in volume in September, and looking at the moving average, volume has been growing. https://twitter.com/BakktBot/status/1326528928924770306

Fair enough, and we won't care where this organic push comes from (or I won't anyway). I just have always had trouble believing that institutional forces were waiting for some moment to go all in, I think they've already been here since 2016 (which to me was rather what was behind the 2017 rally).

Nevertheless, I don't see it as manipulation either, not with a market like Bitcoin.

Bakkt -- disappointment because of the supposed impact it was meant to have had. Their ATH pales in comparison to market share. Yes, I know physically-settled derivatives, but still. Not the game-changer it was heralded as.



Source: Skew

[Ridwan Fauzi]

Honestly, I never had any thinking that bitcoin can't reach its all-time high anymore due to take profit that was planned by them.

I just think that all bitcoin's investors will have the same intention to see bitcoin price touch its all time high.

If you know the technical analyst, there is a strategy called cup and handle strategy where if the price coin touches its high before and the correction come then after that its price movement will pass the previous all-time high and I hope it can happen to bitcoin price when it touches $20.000.

And I think the institutional investor will have a good trader to run their money, it means they are a trader and they should let bitcoin price touch $20.000 again and don't decide as a decision to not sell/taking profit before $20.000 haven't reached.

[slapper]

Institutional investors are indeed better than normal investors. And they definitely do not see this rise as another bubble like what used to be in 2017. The bubble in 2017 was too big and created a huge FOMO covering all crypto investors. Everything was crazy back then and we could not predict what the market tends to. New peak after new peak, this had lured many many people to join the game. Suddenly, everything stopped. Crashing caused FUD. FUD created the next FUD. And then, as the results, crypto value kept decreasing months by months

Right now, the situation has changed. Investors have a solid behavior in the price of bitcoin and this has been recorded by many pieces of research. Amassing bitcoin is what they are doing right now but at a much slower speed. This forms a stable foundation which prevents the price of bitcoin from falling dramatically. Therefore, I personally believe we can surpass our all-time high during this time. And institutional investors are driving our bus on the right path

Saving my money now in order to make some investment in cryptocurrencies. It is best to put my fund in Ethereum and XRP

[FanEagle]

This is looking like just a start. Because of these companies coming into bitcoin with hundreds of millions of dollars and them making 50%+ profit along the way because of it, there will be thousands of other companies all around the world with cash reserves looking at them like why are they still in cash and why are they not going into bitcoin with it just to keep it in bitcoin until they find something better.

The implications of these big companies making these type of unheard of income from bitcoin will show rest of the world that they could move to bitcoin too and make a profit there as well, not right away and not right now but they could get in and they could just wait for years before they could profit as well. It is certainly better than %10 they could get elsewhere from fiat income.

[exstasie]

If institutions are driving the rally, it would still be organic. It would still just be supply and demand playing out, whether demand is predominantly coming from retail or institutional investors.

Richard Wyckoff's market theories touch on this dynamic. In a bullish accumulation schematic, the big boys absorb all the supply at the bottom of a bear market. Then once that supply dries up, price gets marked up into a new trading range. This establishes a bull market, as all the sellers and shorters from the bear market become trapped at lower levels. They drive prices higher, which gets the attention of retail buyers. Price rises until the big boys start distributing all their supply to late buyers. Then the market enters a distribution schematic and price gets marked down.

Some might call this "manipulation" just because it means institutions move the market just by virtue of their size. I would call it organic supply and demand though.

As for Bakkt, I don't think it's been a disappointment. They had their ATH in volume in September, and looking at the moving average, volume has been growing. https://twitter.com/BakktBot/status/1326528928924770306

Fair enough, and we won't care where this organic push comes from (or I won't anyway). I just have always had trouble believing that institutional forces were waiting for some moment to go all in, I think they've already been here since 2016 (which to me was rather what was behind the 2017 rally).

Back in 2016 it was just a handful of hedge funds and former Wall Street traders. I think more and more institutions have been dipping their toes in over the years. I don't see it as institutions waiting to go all in at once, not at all. In fact, going with my explanation about Wyckoff above, I see institutions as crucial to the accumulation schematic occurring from late 2018-present. They've been absorbing supply for years and are likely a big reason why price eventually got marked up above the ~$10.5K and ~$13.8K long term resistance levels.

Bakkt -- disappointment because of the supposed impact it was meant to have had. Their ATH pales in comparison to market share. Yes, I know physically-settled derivatives, but still. Not the game-changer it was heralded as.

Who says Rome was built in a day?

Like I was saying, a lot of institutions are dipping their toes in, as opposed to putting significant trading capital into a relatively illiquid market. It takes time for the kind of liquidity you're talking about to build up. I could see them being more relevant in another year or two.

[buwaytress]

Back in 2016 it was just a handful of hedge funds and former Wall Street traders. I think more and more institutions have been dipping their toes in over the years. I don't see it as institutions waiting to go all in at once, not at all. In fact, going with my explanation about Wyckoff above, I see institutions as crucial to the accumulation schematic occurring from late 2018-present. They've been absorbing supply for years and are likely a big reason why price eventually got marked up above the ~$10.5K and ~$13.8K long term resistance levels.

I definitely think a lot more did it discreetly earlier through OTC brokers. The number and volumes of OTC desks in 2016 were already really large, and a lot of it off-chain too, especially when you had the same custodians just basically changing ownerships of wallets or maintaining off-chain accounts. So I still think a lot of that was and continues to be invisible.

But yes haha baby steps for Bakkt and the like. I'm not dissing the opinion, and agree this could very well be organic.

[Kelvinid]

Big companies are now pushing themselves to adopt the future digitalization system where Bitcoin is a reasonable investment to take now. They'll be buying in volume and that hugely affects the price trend making it high.

If we could read this article they are preserving more Bitcoin for future used and more companies will come to follow then.

The website bitcointreasuries.org is curating bitcoin treasures held in reserve by publicly traded companies from across the world. At the time of writing, 13 companies with a combined total 598,237 BTC, or 2.85% of the total supply of 21 million BTC

It was just a few companies who have already done this but it goes far already and has a huge impact on the market. As we expecting more and more establishments will accept bitcoin, the more we see such sentiment.

[wxa7115]

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.

I don't think that being an institutional investor an a whale instantly means that they are for long term, in fact these people aren't buying Bitcoin because they believe in "HODL" or its technology, they simply care for profit. If their analysis will say that Bitcoin is going down, they will dump it without any second thoughts, they aren't emotionally attached to it, unlike many retail investors.

You are right being a whale and an institutional investor does not mean by itself that they are going to come to this market for the long term, however just a few days ago the CEO of MicroStrategy literally stated that the reason they entered the market of bitcoin was because they wanted to find a store of value, so there is no doubt in my mind that someone looking for that is looking for a way to store their money and their wealth in an investment for the long term.

And while not everyone is doing that and we cannot expect them to do that it is refreshing to know that investors with large amounts of capital are considering bitcoin to be the best option to store their wealth in this changing world.

[Harlot]

Assuming if this is true then we all know what they can do as well and that is pull the market down, basically they have a big influence in the market if that is what the article is implying since the capital they have as well as the position they have is already big that can move the prices with their decisions. So assuming that the institutional investors will be more and more in the coming days then they will have more control in the market which is scary to think.

[beerlover]

This is a double edged sword so it could mean great things or it could mean horrible things for us. Maybe microstrategy or grayscale didn't bought all of those coins just to make a profit and sell and get out right away, maybe they got involved because they want to hold it as long as they can and try to make a profit, however that doesn't change the fact that they "could" do it as well if they want to.

What stops grayscale from selling hundreds of millions of dollars (is it a billion already?) crypto tomorrow? Is there a mechanism that stops them? There is none whatsoever. So, what we are saying right now is "they could destroy the market by selling a billion dollar worth of crypto but it wouldn't be profitable so they won't do it" and not they can't do it. Which is a bit scary but still we can't do anything about it but to just accept it.

[exstasie]

This is a double edged sword so it could mean great things or it could mean horrible things for us. Maybe microstrategy or grayscale didn't bought all of those coins just to make a profit and sell and get out right away, maybe they got involved because they want to hold it as long as they can and try to make a profit, however that doesn't change the fact that they "could" do it as well if they want to.

To hear Microstrategy's CEO tell it, they'll never sell, at least during his lifetime: https://cointelegraph.com/news/michael-saylor-claims-the-company-will-hold-bitcoin-for-100-years

Grayscale is different because they sell shares against their BTC to investors. The vast majority is not really theirs in that sense.

I am curious how much they personally hold because they've been pocketing a huge 2% management fee for years, and they take it in the form of BTC. Barry Silbert does seem awfully bullish on Bitcoin after all.

What stops grayscale from selling hundreds of millions of dollars (is it a billion already?) crypto tomorrow? Is there a mechanism that stops them? There is none whatsoever.

Grayscale can issue new GBTC shares, but clients can't redeem them for the underlying BTC. They can only sell GBTC on the open market.

There may come a time when Grayscale starts allowing share redemption, which could create new BTC supply on the spot market as GBTC shareholders move to arbitrage the gap between GBTC and spot. For now that is not the case, which is fundamentally bullish.