Topic: Institutional Investors Are Using Back Door for Crypto Buys (Read 432 times)

Trust me mate, they are not done yet and until we have finally reached some high level of adoption and in which the market is being used in real life, with less speculations, before we can manage to see that happen, and trust me by then, the institutions would have gained enough ground anyway, judging from how they would have manipulated the market to their favor to increase their stash for the long run.

So, in that case, if you think this same thing will not repeat itself again until this space becomes regulated and there are some rules in place when it comes to manipulations, then you are really living in your own dream world.

Of course! If I may ask, you that you are not even an institution, what do you care about? You think anyone is basically here to lose? Institutions run a business in the financial space, and the sole aim of every business is to make profit, no two ways about that.

However, for the fact that they have upper hand and they know how to always drive the market in their favor, based on this upper hand, they will keep doing that, and driving the weak hands from the market until they all become laggards eventually and only those who will be benefitting from the market would be the real believers, the institutions and those who managed to dodge the bullet of the institutions.

I'm on th fence about this. I mean these institutions only care about one thing, and that is profit. The more profit they have, the more they're willing to put money up front. The problem is, i and like minded other would want crypto currency to be stable in the market nit necessarily boost it's price.

Well, more people getting involved in crypto currency the better, whoever they maybe. I just hope we don't see another repeat of what happened early this year where they just pumped BTC and dumped it all in the span of 3 days so we can experience a year long price correction. let's keep on what we're doing. Buying and holding.

They won't even want to do that now until they have been able to accumulate enough. They are not dumb actually and just like you mentioned, they know the impact buying from an exchange would create and apparently, the best way to do all that without being spotted is via the backdoor channel, while they possibly keep suppressing the price on exchange from moving haywire (borrowing your word) until they sure have been able to accumulate as much as possible. At the end, the dumb ones will end up losing out because one way or the other, the buying spree on exchanges will start.

I am wondering which other option you think they would have than going the OTC way. We are talking about institutions here, buying large volume of digital coins and of course, you cannot expect them to simply just stroll into an exchange and start speeding things up regarding how speculative the price can be and rise fast to create FOMO. Institutions know when to be stashing up and would want to leave that uncertainty that way for now and keep accumulating until they feel they are fine with it, and if they will have to do all these via exchange, I am not sure the liquidity will be enough to not get the price pumped unnecessarily.

If big Institutes comes here for investment i think it will strengthen the bitcoin and crypto system at all because when we have big investors we have a prosper situation and now many other coins are in the market which requires investment for long term projects are good but some time they fail due to lack of funds, May they use back doors but they are good at all.

No one understood the real concern. Bitcoin is not fungible. It was already predicted that a coin that has gone through the hands of criminals in the darknet, and sometimes coins that has gone through the gambling sites will be priced less than the coins that didnt. Its happenning.

Having that said, coin mixers will be very happy lol.

I have also read a lot of information about officials of countries using money to invest cryptocurrency in secret. This shows that the trend of cryptocurrency investment is being developed around the world and government officials are not out of the game.

It is not that weird that people with huge amount of money trying to buy over the counter all together. If you go to binance or any other similar place and try to buy for 10 million dollars its going to affect the market for the worse for you, you will not buy 10 million dollar worth bitcoin at the same price, it will go up and you will have to pay premium on what you are doing because of the market.

However if you buy over the counter you can agree on a price and just pay 10 million dollars to get bitcoin at the current market price without any upwards movement, just on the agreed price of it.

It's actually happening. It makes sense as well, especially when you take into consideration that the 'criminal' side of Bitcoin isn't entirely cleared yet for legal entities.

I however don't think it will be a long term problem. Most institutions will not hold Bitcoin themselves, but use a custodial party to take care storage and whatnot. They will just stick to an ETF or other an product that grants them the exposure they are looking for. That's the perfect way to counter the storage difficulties and potential (but very unlikely) legal problems.

This very well may be the reason Coinbase will start to require KYC/AML even for pure crypto activities. They want to know who to screw over when they expect someone is 'abusing' their platform.

Yeah. And with the nature of bitcoin, you can't really track private transactions at all which means that the actual trading volume for bitcoin is largely unknown, even with the misleading volumes on exchange, let alone off exchange.

We could see more and more people go with these private trades in the future, or agreements, settling for larger volumes than an exchange is usually handling.

Others have raised the issue of fungibility and I think that's a concern as well. Though, we have really no proof that this is actually happening just off the sole word of one person. I would find it extremely surprising if 20% premiums are being paid for these coins, tbh.

It is now more revealing of fungibility's importance in cryptocurrencies if theres a market that fills a gap for institutional investors' demand for virgin coins with a 20% premium.

There were already presumptions before that markets for clean coins would emerge.

They're the best options available. Why would anyone with deep pockets go to an exchange and wreak havoc with the order book? Not only would your pricing go haywire, you'd get preyed upon by all the little shits lurking.

OTC is by far the most sensible route for many.

Institutional investors have so many purchase options that they do not need to use backdoors.
This seems to me one of the many fake news that would claim to influence the market

It is very probable that investors have tested the crypto's land, so as not to miss the opportunity.
And above all to try to understand how dangerous the crypto are ...

If institutionals investors are investing into cryptocurrencies through back door then bitcoin should have increased in price.  Bitcoin has been in bearish position and we expect investments to always translate into bullish trend.  Institutionals investors will one day Came into the market openly.

There is always someone who knows one more than the others and makes statements that could also be true but can not be verified.
Institutional players may invest secretly in the cryptomarket.
So what?

The OTC market have long been there for large scale investors, but I guess this is only something that has been covered recently.

Obviously, large investors that don't necessarily have to belong to any particular institution would want to make private moves without affecting the rest of the market and/or to hedge against the volatility of bitcoin.

What I found most intriguing was probably the fact that premiums are being paid for untainted coins. I don't know if this is being exaggerated or actually happening. If it was actually happening, that poses a real issue as to the fungibility of bitcoin, especially with it happening with such a wide spread of 20%.

I read about the news few days ago and I begin to think that crypto market could worth more than the price stated on the coinmarketcap because most of these institutional investors investing through back doors might be accounted for and this more reason why we need the bitcoin ETF to approved so that these institutional investment will be more open and it will attract more to join.

I am rather skeptical.
It seems to me that kind of usual news can not be confirmed and is deliberately left to circulate just to manipulate the market a little.
Obviously, everything is possible.

This seems odd to me. A two tier market will rapidly become a market for nothing. I hope this is astute marketing from miners to the easily duped.

Great article.  And the part I quoted here is what I assume the reason behind why these investors want instruments like futures and bitcoin ETFs.  It totally makes sense for deep pockets to not want to buy bitcoin on a traditional exchange, since for them the market is relatively small and they can drive it up or down with big buying & selling.  

In addition, I can't imagine anyone with serious money wanting to use any exchange other than a place like Coinbase, which is probably the least likely to scam you.  There's no way in hell anyone is going to use even an exchange like Binance to buy millions of dollars' worth of crypto.  

So what I'm wondering is what will happen if crypto actually crashes and these institutional investors lose a lot of money very quickly.  That could have some serious repercussions for other markets.  Hedge funds tend to use a lot of leverage when they trade, and that's gotten them in trouble in the past (like Long-Term Capital Management back in the 90s).  It's kind of scary to think about.

I don't think there's a shortage of bitcoins, though it's hard to imagine there would be enough for everyone if investors with extremely big wallets want to get in.  Again, this is where bitcoin futures would come in handy.  They wouldn't actually have to own any bitcoin; they could just place bets on bitcoin's price.

I'm also thinking it can be one reason they indulge in such back door buying, more like disguising and probably buying lower quantity and from various exchanges. This is actually possible.

In order to get the desired volume of cryptocurrency they go for back doors in order to get advantage over the market since the main market can't sell the amount of coins that are needed to fulfill the demand.

The market managed to increase multiple times before with high mining costs which were close to the real market costs, it's been done before and it will happen again. Miner's always act as a negative subduer on the market but the effects of their sales are not decisive enough to control the whole market.

As the market is highly volatile, it is difficult to even predict what will happen by the end of this year. Hopefully the market will recover and thrive again by then. But, aything can happen.

Well,miners have to pay their operational costs,like electricity,salaries,loans,rentals,taxes.It's common sense that they have to convert a part of their coins into fiat money.Obviously they can't wait until forever for the prices to reach last years ATH.I doubt that the miners might cause a price crash,they might cause a continuation of the bearish market and nothing more.
I'm not familiar with the OTC markets.I will have to do my research.

As stompix and gentlemand pointed out, numbers might be a bit overestimated and consequences of such a market behaviour could be bad. The OTC Bitcoin market is probably not that big but it certainly explains where the volume disappeared. Unfortunately, OTC prices tend to influence market prices quite slowly and insignificantly.

I agree that it is a good article. I never thought about what miners do with their coins, actually! I mean, traders are selling and buying coins, miners are generating coins.. It never crossed my mind that there can a big unaccounted market with miners selling newly generated coins to institutions! It's also funny that the current market situation which is mainly considered to be a sad one by crypto users is actually positive for more conservative investors, because the volatility is not as high as it used to be. Stable fluctuations somehow make the market more trustworthy, even though it lost a huge part of its capitalization.

If they new coins sale indeed at a 20% premium it would be stupid for them not to do so.
They could easily sell the fresh coins and buyback with at least 10% net profit.

But reading again the article, I've spotted another strange thing


Miners can't sell more than 1800 coins, at 10k$ it would be 18 millions$ a day, in a 30 billion market ...how can you call them the BIG sellers?

This seems bizarre to me. If they depend on 'clean' coins the second they move they'll have Silk Road, stolen Gox, and lords knows what else polluting them. A two tier market will rapidly become a market for nothing. Virgin coins won't be able to move outside their gilded channels and everything else will be thrashing around in the mud.

Either coins get a hall pass unless there's a direct link to the owner's evil or we may as well all go home now. Would they pay under market for Tim thingie's US marshal auction coins? The moment something like this is taken seriously is when things start to unravel.

I hope this is astute marketing from miners to the easily duped. If not then it's a bit worrying.



They're going to have humongous bills to meet. Not many will have the luxury of waiting for a mythical price that may never come. It signals that mining is OK if they're offloading as is. They're still making a profit.

Something caught my attention more in the article and it is saying that miners have scheduled cryptocurrency sales which I think is really more concerning. Because if miners are selling their mined cryptocurrencies now then that means they don't care about at what price they are selling what they mined. Which means that even though we are still in the bear market mining cryptocurrencies is still a sustainable form of investment. It could only mean that they are still running their operations while still earning income.

As stompix have pointed out, the figures seem to be quite exaggerated, though I believe that to some degree, OTC deals for crypto is really happening for years now--and it's a shame that the Gox trustee hadn't thought of that. I'm not surprised on how deep these institutional investors are in bitcoin; I'd be more surprised to know if they aren't, given that this is a new market and the one who gets in first has the highest leverage. There's just too much money going in on crypto for every bull run that they simply cannot miss those phenomena. Maybe they're just afraid to shake the markets when they publicly announce their involvement? That would really make some plans ruined if you'd ask me, that's why they prefer to do OTC trades which, IMO, is a sensible and ideal move.

Two things I'm not agreeing with:


OTC trades worth 30 billions$ or 3 million coins a day?
I think they've added a few extra digits.

The ones that deal through OTC are not buying in the morning and selling in the afternoon, those are either long-time investors or whales getting out of the game. Besides OTC deals are no happening in a few seconds, not when huge amounts like those are exchanged.


If there would be indeed a shortage of coins we would slowly see that in the price...and there is not a single trace of it.

....

Excellent read. Wound up bolding near to the entire thing.

This seems to answer some of the commonly asked questions I've seen people asking while introduces new info which could better help to explain crypto price trends and some of the recent developments we've seen.

This would also seem to introduce new questions such as what volume has shifted from crypto exchanges to private transactions and to what degree the paradigm shift is related to declines in crypto trading volume.

The 20% increase in prices for newly minted bitcoins also interesting to consider.