Why people are hype when they hear the words "institutional investment"?

Lucius

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Quote from: Aliceooo78 on August 08, 2021, 12:24:21 AM

The biggest capital drivers of Bitcoin's surge are mainly Wall Street hedge funds and family offices. Their investment logic is that the supply of Bitcoin is limited (the supply is halved every four years)

True, the biggest money is there - but also the biggest risk for Bitcoin. Unless someone thinks the WS will embrace BTC as something worth more than just a means of making a profit.

Max supply is still 21 million, unless some nonsense happens and someone manages to change it in the future - and halving only reduces the miners' reward every 4 years by 50% which will eventually result in 99% of all mined BTC around 2030. In addition, we are approaching a circulation supply of 19 million, which may seem like a lot - but another 2 million is also a significant amount of BTC, especially in terms of their value, which is likely to increase constantly.

I want to say that people understand that only big players will be able to buy larger quantities of BTC in the future, and that they will need a lot of small investors to buy only 1 BTC.

Wexnident

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Because institutional investors are people who would actually bring big news to the crypto space. They're pretty similar to any other whale imo, but it does bring that huge advertisement effect since they are a big company that has its name well known to a lot of people, compared to a single-person whale. Though I do think that companies actually trying to hodl crypto is bad news since they're financial capability is a lot higher than some other whales. If they were to disseminate it as a currency then it could help a lot in trying to spread the coin to a lot more entities, but if not, then it's just a negative imo.

Aliceooo78

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"Thanks to Tesla founder Musk for his divine assistance, allowing Bitcoin to finally stand at the $50,000 mark during the Spring Festival." A Bitcoin investor left a message in WeChat Moments with emotion.

This situation has become a common phenomenon, and there have been many cases in which institutional investment has been used to achieve low buys and highs.

Because many investment institutions realize that more and more industries are planning to accept Bitcoin as a new payment method, which will further increase the demand for Bitcoin. In addition, as global central banks continue to increase monetary easing and countries continue to increase the scale of fiscal stimulus plans, more and more investment institutions use Bitcoin as a new tool to fight inflation.

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"Nowadays, it has become extremely simple for institutions to speculate on Bitcoin to make profits-as long as large institutions enter the market, many institutions will collectively push up the price of bitcoin." A Wall Street hedge fund manager involved in bitcoin investment told reporters.

The biggest capital drivers of Bitcoin's surge are mainly Wall Street hedge funds and family offices. Their investment logic is that the supply of Bitcoin is limited (the supply is halved every four years)

Therefore, we have a clear understanding that following the whales (institutions, families) is only temporary, with only one purpose, to obtain the desired profit. My opinion is to hold it for a long time. Don't follow blindly. It is likely to be a bottomless pit.

pooya87

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In my opinion the "institutional investors" thing is actually a very negative news in bitcoin world. Take the "Fidelity" example posted above, do we really want some big corporation owning a lot of bitcoin then selling IOUs to individuals while they remain in full control of those coins? This is not what bitcoin was created for!

But unfortunately people only focus on the "buy $X million" part and get hyped up because that translates into price going up, without thinking about what this really means.

Fundamentals Of

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That's still adoption but in a different sense. That's adoption of Bitcoin as a rising asset or as a new store of value but that's not adoption of Bitcoin as a currency. That's just reinforcing the use of Bitcoin as a speculative asset. They may simply buy and sell Bitcoin just like what the others are doing. But it doesn't help in the adoption of Bitcoin as a medium of exchange.

The words "institutional investment" is specifically exciting because it means a huge amount of money is coming into the market. That could mean an increase in demand and therefore price. But personally, I always take this with reservation because this investment could simply exit just as easily as it entered. And it could equally cause a price fall just as it caused a price rise when it entered. But it all depends on the institution though, or its commitment to Bitcoin, or lack thereof.

magneto

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Because they seem to think that the success of bitcoin is purely reliant on institutional adoption.

This is not true at all. I would actually argue the exact opposite - institutional investment may be good at driving up bitcoin price due to the sheer size of their purse, but will never replace grassroots adoption when it comes to actually furthering the cause of bitcoin.

Mainstream adoption won't come as a result of JPMorgan or Goldman deciding to offer wealth management services that pertain to bitcoin. Rather, it will only come as a result of actual people using the network, and using BTC as a store of value.

hugeblack

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Institutional investment is not random, but rather with tight plans from banks, individuals and entities. Therefore, joining the project means that this project is credible, and therefore they can pressure governments to change or amend laws.

Unfortunately, when these investors join, the market is inactive and has negative news, and therefore when the news starts to appear, they have bought for a long time.

RealMalatesta

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Quote from: Finestream on August 06, 2021, 12:13:25 AM

Do they bring the progress of adoption in the crypto space? or they are just like the whales who buy cheap and sell high for a profit?

All the elements which are participating in crypto space must be contributing for the progress of adoption in one or another way. You sound like whales are negative parts of bitcoin ecosystem but in my opinion whales are integral part and they are contributing even they buy low and sell high for their own benefits.

Quote from: Finestream on August 06, 2021, 12:13:25 AM

I think adoption would result in regular use, but if they'll buy for investment purposes only, that's not "adoption".

You cannot expect that each and everyone in this crypto space should adopt bitcoin and not make use of bitcoin in their own beneficial way. But, like this world needs all types of people and service providers (from taxi drivers to software engineers), bitcoin ecosystem also must need all types people to sustain.

In short, fist people start using bitcoin and then may adopt it. So, let them take time before adopting bitcoins and here we must note that at least they started using bitcoins, that itself very good progress for bitcoin community.

Obito

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Quote from: Kemarit on August 06, 2021, 11:20:41 PM

If I may add, not just they have the huge money, but somewhat majority of this institutions is already established in the field of financials, stocks, gold, oil and other assets. So them dabbing in crypto is seen as sort of bringing confidence in Bitcoin itself.

Another one that I like to add is that they have friends in those industries that have companies too meaning that these institutional investors can influence their network to buy chip in and invest in the market too.

EdenHazard

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Quote from: Kemarit on August 06, 2021, 11:20:41 PM

If I may add, not just they have the huge money, but somewhat majority of this institutions is already established in the field of financials, stocks, gold, oil and other assets. So them dabbing in crypto is seen as sort of bringing confidence in Bitcoin itself.

So Bitcoin enthusiast are elated once they heard the word "institutional investment" because the influx will be big and those entities are not just going to pull their investments when the price goes down as compare to retail investors, they are in for the long term, so it's a plus for us.

They wont pull their investment at once just like what most robinhood trader / investor did due those institution has everything planned systematically.
that is correct that bringing confidence is what most people feel whenever hearing that kind headlines. the question is.. for how long that confidence could lay on them? not for long and guess what, those institution with huge influence taking advantage on us.

we are dying in the end, the next question is... a 51% attack on bitcoin by an instituion?
jeff bezos might doing his own research to conquer the ~~world~~ galaxy.

777Jolami

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Institutional investment is a collection of links, it is hardly from one or the individual. It can be a financial corporation, a collection of banks...etc. Any type of business, they need partners, connections. That means they are stronger than the retail investors in the market. Its impact and consequences are more volatile but also suggest a higher perceived market significance. Institutional investments with a clear plan, such as Grayscale, are also referred to as institutional investments.

Kemarit

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If I may add, not just they have the huge money, but somewhat majority of this institutions is already established in the field of financials, stocks, gold, oil and other assets. So them dabbing in crypto is seen as sort of bringing confidence in Bitcoin itself.

So Bitcoin enthusiast are elated once they heard the word "institutional investment" because the influx will be big and those entities are not just going to pull their investments when the price goes down as compare to retail investors, they are in for the long term, so it's a plus for us.

adaseb

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Because instutional investors usually are large whales. Most retail people can invest what? Maybe $50K maybe $100K if they are lucky to hold that sums. Most however invest less. So they don't really have a large effect on price. Institutions usually can have billions of dollars under their care and they can move markets.

Its not only in Bitcoin or crypto. If there is some large investor like Warren Buffet and he is buying some low/middle cap stock? Everybody will also want in on that stock as long as he's buying. Because he can buy enough to move price to a point where you can make a decent profit.

Then it opens the door to IRAs and ETFs which is what everybody wants. Which means more and more money can flow into crypto. So more money flowing in... means higher market cap and higher prices and more liquidity.

GreatArkansas

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Yeah, some people too are using "institutional investment" for some FUD or fake news to manipulate the market.
That's how huge money is in the institution, but let's not also ignore the retail investment, it could also drive the market even if retail.

So always verify when you read or head in "institutional investment", they can use it for negative or positive effect.

dothebeats

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It's because "institutions" mean "big money" for most people. That's why a lot of people are hyped when they see or hear this word. People already imagine deep pockets taking interest on something that isn't really that big, and that their involvement would mean explosion of the business or something. Just imagine, you are a small business and then someone decided to shower you with money to expand and to better yourself and market yourself. The attention would be massive for you, and business will be booming.

dunfida

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Quote from: Finestream on August 06, 2021, 12:13:25 AM

I just notice that the words "institutional investment" is very huge in crypto.

can you tell what is the expectation when institutional money is invested?
Do they bring the progress of adoption in the crypto space? or they are just like the whales who buy cheap and sell high for a profit?

I think adoption would result in regular use, but if they'll buy for investment purposes only, that's not "adoption".

When they do hear off those words then the primary thing that would be having into their mind is sudden influx of funds inside the market which they do presume that price would rise up

in result they would really be on panic buying or get Fomo'ed if they do hear out those sentiments without trying to look or realize that it wont really be simple as it sounds.

Impressions is normal and even myself would really be having the same reaction too but of course you would really be needing some confirmations.

sunsilk

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In simple terms, it is the huge corporations money coming into bitcoin adding to its market capitalization.

They're for both of those questions that you've asked, even if they're obviously for the profit, still, they're buying bitcoin which also sums up to the adoption.

thecodebear

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Institutions have most of the money in the world, and they move money around by the hundreds of millions or billions. A handful of institutions coming into bitcoin is like equivalent of millions of people. That's why.

Kong Hey Pakboy

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Quote from: electronicash on August 06, 2021, 09:06:40 AM

they are like investors coming to buy BTC they are pouring their money to bet for Bitcoin. that means the demand for BTC increased again.

we accused elon of dumping when the price dips months ago. and just like institutions they also dump, you can say they are also whales after all they want to profit from this market.

I think that this is the only reason that someone is hyped up when they see or hear of institutional investors. I mean it's the only thing that these "institutional investors" bring in the market, huge amount of money to inject and stimulate a growth that will increase the hype of the market further thus making more money.

crwth

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In addition to what others have already mentioned above, you can think about it this way. Institutional investors have more money than regular or retail investors like us. If more supply comes into play within this crypto space, more value will increase; hence the price will rise. Isn't that what we all want? Knowing that we all are here?

If they are willing to risk their capital to it, isn't it already adopted? If you know someone who just HODL's, what is the difference between them and the institutional investors?

electronicash

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they are like investors coming to buy BTC they are pouring their money to bet for Bitcoin. that means the demand for BTC increased again.

we accused elon of dumping when the price dips months ago. and just like institutions they also dump, you can say they are also whales after all they want to profit from this market.

zanezane

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It's just me but I think the reason for the hype behind this is that it's coupled with big money since institutions that are mentioned are corporate giants and I think it's a no brainer that they are going to pour in large amounts of money.

Lucius

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Quote from: romero121 on August 06, 2021, 01:20:00 AM

Institutional investments will be in millions.

It would be time to learn the difference between a million and a billion, because there is a big difference between someone investing $250 million which is petty cash in a market worth more than $500 billion. On the other hand, $250 billion would make a total boom - I dare not even speculate how much the price of BTC would jump.

While some are looking forward to institutional money, one should know that they will not invest in Bitcoin because they think it is something that can change the world - they want to profit. The price effect is inevitable with their investments, but we also know what will happen when one of them dumps on the market hard.

romero121

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Institutional investments will be in millions. This will give more confidence to the common man. Same time these institutional investments have more control over the market. Based on the statement from the Fidelity it is clear to see large scale firms are more into acquiring of majority of the bitcoin. This will make governments to come up with regulations, but the market turns to be a controlled one than an independent market as now.

mk4

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Basically the expectation is that huge amounts of money is going into the cryptocurrency space. Sure institutional investors going in is good in terms of price increase and by giving more legitimacy to the industry, but mostly the people who get a bit too excited are those who want their bags to pump in a short timespan. In which, we definitely don't want huge price spikes. We'd rather see it being a slow and steady increase as to make it more sustainable.

Tytanowy Janusz

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Quote from: Natalim on August 06, 2021, 12:29:39 AM

Very well said @Tytanowy Janusz, institutional investment also is a sign of confidence, this big company would not just invest without evaluating the future of bitcoin and crypto as a whole, so with that confidence, the crypto market will be attractive to potential investors and more money will be flowing in.

Imagine, if they keep investing and hold it, the supply will reduce, hence the price will rise, that's the simple effect of institutional investment.

And 5% of wallet of huge investment found is like an anchor for price for both directions which helps adoption (no volatility FUD). If price doubles this 5% change to 10% and and found is selling because its target is to have 5% invested in BTC. When price dumps this 5% drops to 3% and they buy to reach 5% target. So price stabilize a lot after huge players comes in.

Price stabilization with big volumes = more pro market makers = even more stable price.

Natalim

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Very well said @Tytanowy Janusz, institutional investment also is a sign of confidence, this big company would not just invest without evaluating the future of bitcoin and crypto as a whole, so with that confidence, the crypto market will be attractive to potential investors and more money will be flowing in.

Imagine, if they keep investing and hold it, the supply will reduce, hence the price will rise, that's the simple effect of institutional investment.

Tytanowy Janusz

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"Fidelity Investments Inc., commonly referred to as Fidelity, earlier as Fidelity Management & Research or FMR, is an American multinational financial services corporation based in Boston, Massachusetts. The company was established in 1946 and is one of the largest asset managers in the world with $4.9 trillion in assets under management"
https://en.wikipedia.org/wiki/Fidelity_Investments

4.9 trillion $.

https://www.fidelitydigitalassets.com/bin-public/060_www_fidelity_com/documents/FDAS/bitcoin-alternative-investment.pdf

Paper made by Fidelity that suggest that every well-balanced/diversified portfolio should have at least 5% invested in BTC. If they will apply this to their 4.9 trillion$ wallet ... its 245 billion $ invested in BTC. That's more than 50 times more than mistrostrategy.Thats 30% of btc supply! Maybe 50% of existing, not lost supply. Thats the amount of money we are talking about. Fidelity needs to buy 50% of BTC supply just to "diversify their porfolio" and thats just 1 big institutional investor. There are many others.

And when you have 4.9 trillion $ in assets ... you have long tentacles in the governments of many countries to help push addition and proper regulations.

Finestream

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I just notice that the words "institutional investment" is very huge in crypto.

can you tell what is the expectation when institutional money is invested?
Do they bring the progress of adoption in the crypto space? or they are just like the whales who buy cheap and sell high for a profit?

I think adoption would result in regular use, but if they'll buy for investment purposes only, that's not "adoption".

Topic: Why people are hype when they hear the words "institutional investment"? (Read 205 times)