Strategies of Institutional Bitcoin Accumulation and Their Motivations

[Davidvictorson]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn. Correct me if I am wrong but I am assuming they don't do so from miners via OTC trading offers. Keep reading . I was still years old(don't crucify me) when I learned that institutions can accumulate substantial amounts of Bitcoin without triggering significant fluctuations in the market price. They execute this through purchasing Bitcoin directly from miners via OTC trading offers. Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

[Baofeng]

As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

I guess they are not different from us retail investors and average joe, we are driven to make profits specially in a bull run. So just like the rest of us, we wanted to accumulate more BTC, the only difference is that this whales and institutions have a deeper pockets, hence they can but huge amount via OTC or whichever way they can that will not trigger the market.

Doesn't matter if they are going to gain control of a large percentage, it's just on paper. Sooner or later they will have to sell it for profit and that's what motivated them to stack as much as they can, to the tune of millions of dollars.

[Franctoshi]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn. Correct me if I am wrong but I am assuming they don't do so from miners via OTC trading offers. Keep reading . I was still years old(don't crucify me) when I learned that institutions can accumulate substantial amounts of Bitcoin without triggering significant fluctuations in the market price. They execute this through purchasing Bitcoin directly from miners via OTC trading offers. Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

Every businessman, its target is to realize a profit in the end and that's the game that these institutions, Banks, or hedge fund managers play to try to accumulate their portfolios fast and at cheaper prices. From the institutional point of trading, their way of trading is slightly different from the way we the retail traders trade because of the huge amount of money that they have (Millions-billions of dollars), so it takes them some time to properly take their position in the market because they need liquidity to buy therefore they would employ various ways to get their portfolios ready, maybe buying via miners, the OTC market and even from the main market.

[Jawhead999]

are they doing it to gain control of a large percentage of the market or it is purely profit driven?

Acquiring large amount of Bitcoin means they're have a power to control the market in short term effect and they also making money since there are so many stupid people making decision based on whales news, it's mean the answer is both of them.

Don't panic or worried too much, it's not as simple as that for a whale or country to buy all of mined coins.

[davis196]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn. Correct me if I am wrong but I am assuming they don't do so from miners via OTC trading offers. Keep reading . I was still years old(don't crucify me) when I learned that institutions can accumulate substantial amounts of Bitcoin without triggering significant fluctuations in the market price. They execute this through purchasing Bitcoin directly from miners via OTC trading offers. Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

I wouldn't call this a "silent method" to buy BTC. This is just a direct method of buying lots of BTC by bypassing all the middlemen(centralized crypto exchanges). I'm sure that OTP trading could also have an impact over the Bitcoin price, because we can't have difference prices for Bitcoin on the trading platforms and outside the trading platforms(at least not in the long run). The miners also want to sell at a higher price.
The Bitcoin market cannot be controlled. We live in 2023 not 2013. Of course that the institutional investors are doing this for the profits. Do you think that they are doing it for charity?

[m2017]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn. Correct me if I am wrong but I am assuming they don't do so from miners via OTC trading offers. Keep reading . I was still years old(don't crucify me) when I learned that institutions can accumulate substantial amounts of Bitcoin without triggering significant fluctuations in the market price. They execute this through purchasing Bitcoin directly from miners via OTC trading offers. Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

What if institutional investors use OTC bitcoin purchase to achieve both goals? Whatever they say, all their activities related to the bitcoin are aimed at making a profit and, of course, it makes sense to buy btc without intermediaries and directly, for the sake of a better purchase price (allows you to get a larger margin). This is especially true when considering the volumes (and amounts) that are being handled.

I won’t say whether they do it directly (purposefully) or indirectly, but institutional investors get a certain control over this market, which allows them to influence the current rate and extract the same profit from this.

In general, you'd be better off asking them directly about institutional bitcoin accumulation strategies and their motivations. Instead of speculating on the subject.

[Tytanowy Janusz]

They execute this through purchasing Bitcoin directly from miners via OTC trading offers. Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

it doesn't have to be miners. It could be other big traders who plan to close a position or market makers who make a big deal with the right premium and then try to close it in the market at a better price making money on the spread by providing the product to the whales - liquidity and time.

And I also heard a rumor that miner tokens are more expensive than market tokens because they are harder to track because they have no transaction history.

And back to the OP's question "are they doing it to gain control of a large percentage of the market or it is purely profit driven?"

What's the point of having a large market share if you don't make a profit? The goal of every investor is to book a profit at the end of the trade.

[naira]

When certain entities or institutions jump into Bitcoin there are 2 points that I pay attention to, regardless of how they get Bitcoin either from OTC or build ETFs like Blackrock did. But in this case the advantage is that Bitcoin is getting closer to the highest price, but on the other hand large institutions with budgets allocated for Bitcoin can easily play the market price so that their profits continue to increase. Don't underestimate Blackrock because they are closer to the SEC and when there is a case against Binance and Coinbase, we should be quite suspicious of Blackrock's involvement in it. Why is that? because if the ETF founded by Blackrock officially launches, big funds flowing quickly, the market will be much more unpredictable. Of course Blackrock will not be held responsible because the potential of Bitcoin has been disclosed by the owner of Blackrock in his interview session. Then does the entry of large entities into Bitcoin make us happy? 50% maybe but in the future I don't know when you have control you can easily manipulate prices in the market.

Back to the Bitcoin cycle where we can still predict the pattern, starting from the Halving/4 years because there are still few institutions that enter, but after large institutions enter they can make Bitcoin prices stable, there are no fluctuations that we often see, there are no challenges that can make us more profitable in collecting Bitcoins.

As small investors, we just need to follow it smartly and wisely, meaning now we have to be able to enter faster, collect more Bitcoins than before. Again, don't take it for granted that major institutions have taken steps to invest in Bitcoin.

[fuguebtc]

As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

If they intend to gain control of a large percentage of the market, their ultimate goal is also profit. If they don't profit from controlling the market, what's the point of controlling? Just like why governments and banks want to control our money, isn't it because it makes them profitable? So I will agree with some of the above comments, organizations, governments or anyone once involved in investing in bitcoin, the profit is what anyone is aiming for.

[DeathAngel]

Their motives are in all likelihood, no different to ours. They want to protect the value & purchasing power of their balance sheet. Inflation is running wild, a stealth tax that is melting away the value of their funds. Bitcoin has proven to be a great inflation hedge over the last decade so they are looking at it we a way of protecting what they have. They may have a lot more money than us but the motives are the same.

[Wind_FURY]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn. Correct me if I am wrong but I am assuming they don't do so from miners via OTC trading offers. Keep reading . I was still years old(don't crucify me) when I learned that institutions can accumulate substantial amounts of Bitcoin without triggering significant fluctuations in the market price. They execute this through purchasing Bitcoin directly from miners via OTC trading offers. Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

It's going to be more about getting better fills with their purchase at the current and fair market price in my opinion.

About your hypothesis about institutions wanting "to gain control of a large percentage of the market" - I believe for entities like BlackRock, it's ALWAYS in their M.O. to corner the market, IF they can. The situation that we should be concerned about is, how much of the TOTAL SUPPLY should be STORED in THEIR centralized vaults before we can actually say that Bitcoin is failing? What is the threshold? 50%? 60%?

[Who is John Galt?]

As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

I would suggest that this is a complex solution. Of course, no one wants to buy more expensive if they can buy cheaper. But even if you want to acquire a large amount of any asset over a long period of time, simply buying up on the market can be a difficult task. And the purchase agreement from the "manufacturer" makes it more predictable, simple and convenient.

[Crypto Advice]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn. Correct me if I am wrong but I am assuming they don't do so from miners via OTC trading offers. Keep reading . I was still years old(don't crucify me) when I learned that institutions can accumulate substantial amounts of Bitcoin without triggering significant fluctuations in the market price. They execute this through purchasing Bitcoin directly from miners via OTC trading offers. Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

Well, Institutional purchases of Bitcoin, whether through OTC (Over-the-Counter) trading, can serve various purposes and it's not necessarily an either-or scenario between gaining control of the market and profit-driven motives. Here are some key factors to consider:

Profit Motive: One of the primary reasons institutions invest in Bitcoin is for profit. They believe in the long-term potential of Bitcoin as a store of value or digital gold, and they seek to benefit from its price appreciation over time. OTC trading with miners can offer advantages like lower fees and reduced price impact compared to buying on public exchanges, making it a more profitable approach.

Risk Diversification: Institutions often allocate a small portion of their portfolio to Bitcoin to diversify risk. Bitcoin's price movements are relatively uncorrelated with traditional asset classes, which can help mitigate overall portfolio risk.

Hedging against Inflation: Some institutions view Bitcoin as a hedge against inflation and currency devaluation. Buying Bitcoin can be seen as a way to protect the value of their assets in an environment of monetary expansion.

Regulatory Compliance: OTC trading with miners or other large holders of Bitcoin can help institutions comply with regulatory requirements. It allows them to conduct large transactions without causing significant market disruptions or raising concerns about market manipulation.

At last I can say,
while institutions do aim to make a profit when they accumulate Bitcoin, their motives are multifaceted. Profit is certainly a significant driver, but so are diversification, risk mitigation, long-term holding, and adherence to regulatory standards. Gaining control of the market is not usually the primary objective, as the cryptocurrency market is highly dynamic and difficult to control even for large institutions.

[Z-tight]

As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

Surely the main reason these institutional investors are buying BTC is to make profits, whether they buy OTC or through crypto exchanges, the main reason doesn't change. If they wanted to create manipulation, they will choose crypto exchanges, because their "buy or sell orders" will be open for all to see, and it can immediately influence the price movement in the market.

I don't think institutional investors want to gain control of a large percentage of the market in itself, but they just want to own enough BTC so they can make so much revenue when the price pumps. As for the reasons why some of them choose OTC, there are many actually, they don't want their buy or sell order to be public, it is less transparent to buy OTC than in crypto exchanges, they also want their tx's processed faster and probably with lesser hassles than crypto exchanges.

[Blitzboy]

Look, Saylor's buying sprees during downtrends might seem like a coincidence to a naive viewer, but they're actually very smart! OTC trading isn't a dark, secret rite; it's a way for large institutions to hide their identities. It lets institutions buy a lot of Bitcoin without setting off alarms on the market

Why do they do it, though? Do you want to help people or do you want to hurt them? Both! Institutions aren't like simple picture bad guys or good guys. There's no doubt that they want to make money. But with money comes power, and power brings control. When you have a lot of Bitcoin, you're not just involved; you're a force to be taken seriously. And believe me, these places? They want to think deeply

[hd49728]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn.

I am not sure every time MicroStrategy bought bitcoin, Bitcoin price increases but logically it sounds reasonable. Because people will see positive signals from MicroStrategy buyings and they will FOMO, lift the price up a bit more. However, it won't last too long because FOMO won't be able to result in sustainable price growth and price level. After FOMO effect is cooled down, price will be corrected a lot.

You can check more about MicroStrategy Purchasing history: https://bitcointreasuries.net/entities/1

As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

Surley it is purely profit driven. They don't spend big capital just for fun or just to gain control of majority of the market and they do all of these for profit.

[Plaguedeath]

Talking about this matter is more like a conspiracy because no one can verify it, we're just use our negative view against the centralized institution. I think there's always a clickbait news whether it's a good news or bad news, but it depend on which one will viral.

The most viral news will affect the market and people will not aware with the other news.

[Lucius]

When Michael Saylor's, MicroStrategy buys bitcoin, the market price increase and they usually do so to mostly when the market is experiencing a down turn.

I would not agree with that assumption, because even though this may have been the case in the beginning, now these investments are less and less (if we look at the amount of BTC purchased) and have almost no influence on the price of BTC. Likewise, Saylor is not one of those who knows (or wants) to hit the dip, but buys when they have enough cash, regardless of the price.

Correct me if I am wrong but I am assuming they don't do so from miners via OTC trading offers. Keep reading . I was still years old(don't crucify me) when I learned that institutions can accumulate substantial amounts of Bitcoin without triggering significant fluctuations in the market price. They execute this through purchasing Bitcoin directly from miners via OTC trading offers.

Exactly, if you want to buy a lot of BTC without affecting the price (which is desirable if you plan further investments), then use the OTC method and a company that will do it for you. An example of how it was done by Microstrategy with the help of Coinbase:

We’re excited to announce that Coinbase was selected as the primary execution partner for MicroStrategy’s $425 million purchase of Bitcoin earlier this year. Using our advanced execution capabilities, leading crypto prime brokerage platform, and OTC desk, we were able to buy a significant amount of bitcoin on behalf of MicroStrategy and did so without moving the market. MicroStrategy chose Coinbase because of our market leading tools, which include smart order routing and advanced algorithms as well as our white glove sales and trading services.

Our system takes a single large order and breaks it into many small pieces that are executed across multiple trading venues. This type of smart order routing minimizes the trade’s market impact and helps disguise the overall trade size. Leveraging our technology, the trading team achieved an average execution price that was less than the price at which buying started. In periods of high volatility, our advanced trading tools improved the client execution by as much as 1%. For MicroStrategy, this strategy resulted in savings of approximately $4.25 million.

Now, I have learned that this is one of the ways that Blackrock is accumulating bitcoin. As some asked, I will ask here too: when institutions use this "silent" method to buy bitcoin, are they doing it to gain control of a large percentage of the market or it is purely profit driven?

Where did you get that information from? BlackRock is only exposed to BTC as a shareholder of Microstrategy, and why would they buy BTC if their spot BTC ETF has not been approved yet?

[franky1]

Where did you get that information from? BlackRock is only exposed to BTC as a shareholder of Microstrategy, and why would they buy BTC if their spot BTC ETF has not been approved yet?

because they need to have reserves to prove they can open up a ETF market

they need to have the reserves to even be able to offer baskets of shares that represent the coins
they cant sell unbacked shares to then buy coins they do not yet have.. as thats against the purpose of a ETF

its why the winkle twins(gemini) grabbed loads of coins before filing a ETF many many years ago. its why grayscale did too

[hd49728]

I would not agree with that assumption, because even though this may have been the case in the beginning, now these investments are less and less (if we look at the amount of BTC purchased) and have almost no influence on the price of BTC. Likewise, Saylor is not one of those who knows (or wants) to hit the dip, but buys when they have enough cash, regardless of the price.

Likely Saylor and MicroStrategy only did Dollar Cost Averaging when they had new capital for DCA. They don't care what is price of their buying and I remember I read that after MicroStrategy buyings, Bitcoin usually have dips.

Check some in Bitcoin Historical price and events. #211 shows price dip a few days after MicroStrategy purchase.