Topic: Will institutional investors kill the four year boom/bust cycle? (Read 349 times)

1. Institutional investors are scooping up lots of btc according to the latest analysis. But there is also one fact that they are not selling just because they are diamond hands or whatever you'd call them, there is one more reason that they can't sell it entirely on the market because there is not enough liquidity on which they may dump their coins and they will least likely do it because that will not make them any profits. They are also not doing it because many major institutions are holding big leveraged positions in futures and these institutions are helping them to survive and not lose everything. Because if a retailer or group of retailers lose money, that won't make any impact but a news stating a big name lost their entire capital will surely bring enough chaos to create panic in markets and see a sell-off again.

2. General public will be less interested in btc because institutions are holding a big % of it and will keep the price steady and range-bounded (they can do that for years) and some big wallets will also be bought by these institutions only if they come out with their coins. However, general public's interest in alts will rise due to this because institutions are least interested in altcoins and still today, retailers are moving the alt markets so this is where their money will go.

Not really. I understand that they have a lot more money to actually change something about the market, but if you were a rich whale that could follow a pattern and make billions, would you want to change that at all? Why would you want to change it?

I think by 2025 they will know that it will go up, and they will buy before that a bit, accumulate slowly to not disrupt the market, and then make a ton of money, buying 1-5 billion worth bitcoin in 2 years is nothing, you could do about 20-30 million dollars a day, which will not be even felt, and you could have so many bitcoins, and that is how they will do it to make sure they can profit from this pattern.

Really good one analysis and  correct in the teoric side, but he comes the empiric thing.

Its really good to read this posts after a long run and a few cicles like now.

And we had one really boom/bull cycle and a big bear market in terms of %.

So institutional hands until now only makes bigger the flow cash and some holdings but they didnt change so much the movement of the market and i repeat, UNTIL NOW. LEts see in the future if we can see some changes.

Asides of this, we see a bad side of the "institutional" when they make a mess they can drag the market with them.

Only to clarify i'm not criticizing your write because i also think in the same way as you, but with the news in the hand we receive a hand in the face of reality.

Also we cant discount a new black swan in the future, the earth its moving really fast this last 3 years, we cant see two months ahead in terms of economics.

After saying all this i think in the future we can see finally a most stable cycles not only for the institutionals but also because the market can have more mature.

Institutions FOMO and panic sell too. Here are some charts of my favorite precious metals market, rhodium:





The dotcom bubble is another vivid example of what happens in the "traditional" markets. In other words, the same thing as Bitcoin. It bubbles hard, it crashes hard, then it keeps going up long term.

Fundamentally, I don't think you can have extreme exponential upside without downside volatility. That doesn't mean all the gains will be lost (not at all), just that there is always a "what goes up must come down" effect as hype eventually wanes and investor fatigue and disappointment sets in. Richard Wyckoff would just call that a distribution phase. This dynamic is more about the emotional psychology underlying all market cycles than anything to do with Bitcoin itself, which is why we see it in all speculative markets.

I posted this in a different thread but I think it's relevant here:


If you watch the video, you'll notice that he points out the extreme volatility during the early innovator stage which smooths out as the s-curve goes vertical.

Yeah, essentially that.

The insane boom/bust cycle that has dominated bitcoin's market cycles in its first decade is driven by the emotional investing of the retail market FOMOing into something they just heard about and then panic selling when they see that thing they just heard about (and know nothing about) dropping in value.

Corporations and investment firms who do research and don't make an investment lightly, along with seasoned accredited investors, will not be creating such a volatile character in the market. And they will be owning the majority of the available coins in the next few years simply because they are the ones with all the money. The retail market will shrink as a percentage of the market from like 90% to something far lower, as will their ability to cause crazy parabolic runs and crushing crashes. We will still get fits of FOMO and panic causing big pumps and sharp corrections or mid-term downturns, but it is going to take years for institutional money to slowly work its way into what is still a very small asset - they could buy the entire bitcoin market cap dozens or hundreds of times over right now - so there will always be more institutional money wanting to get their hands on Bitcoin, and this will stop any crash caused by the increasingly less significant retail market. Corrections won't turn into long term bear markets anytime in the next few years.

Essentially, the "base" of the market will move up much quicker because of all the long term institutional money that is being invested for many years to come instead of to make a quick buck. In 2017, despite rising from $1000 to $20,000, the base of the market even by end of 2018 was only $3000, so that is where it bottomed. If the base this fall was $10k, it is quickly rising now. As an example, if we see price go from $10k a couple months ago to $200k at end of next year (like 2017), the base is going to be a lot higher than $30k, and continuing to rise in a correction as institutions buy up cheaper coins during the correction for long term holding, rather than panic selling what they already have. It would maybe result in a downturn for a few months and 6-9 months later it's back pushing new ATHs. And this will continue for the better part of the decade until institutions have gotten a few percent of their funds into Bitcoin, pushing the price to the $500k to $1 million range, not as a brief peak to hit before a crash, but as a well supported price by the second half of this decade.

Parabolic runs still happen but the "crash" is limited on the downside as other people buy the dip and the run keeps going.

Look at the nasdaq, it has been in a bullrun for 10 years.  So btc could start looking more like a bull run in traditional markets and less like a dot com bubble such as in 2017.

I just read his twitter where he talks about it and I quoted him in the WO thread, but anyway, we should not forget that it is normal to see these theories in a bull market.

In a bear market these theories are either not said or go unnoticed. Having said that, I hope he is right.

If I have understood you well, you are saying that these parabolic moves up won't happen because institutional investors will help stabilize the market. So you are not so bullish as him

The absence of a bear market means that we will witness a price bubble that will end with the desire of many to buy and then the sudden collapse in prices, which will make all investors poor.
I think that the recent increase was caused by speculation, especially with the decline of the dollar and the desire of governments for more stimulus packages, in short, searching for safe havens.

Actually today I read an article by someone named Dan Held (looking him up he's apparently an early bitcoin adopter and an executive at Kraken) who is saying exactly what I'm saying here in this thread. That Bitcoin is now entering a super cycle, as he calls it.

So instead of the typical 4 year cycle coming to a close in a year, Bitcoin is now entering a super cycle that will create a bull run that lasts for multiple years, instead of a peak in a year followed by an 80% crash and a 3 year wait for the price to come back up before the next leg up. The end of this 4-year cycle will morph into a larger super cycle thanks to acceptance from institutional investors. This super cycle is a new phase for bitcoin investment - moving from a retail investor driven market to one driven by institutional investors with enormously more money to throw around. It's the type of thing where we are gonna see maybe a half decade of growth with no substantial bear market in bitcoin as institutions work their way into the market. This super cycle will take Bitcoin from $20k to $1 million (or something like that) in that time frame.


Here's the article. This guy is thinking exactly what I have been thinking recently:

https://dailyhodl.com/2020/07/08/bitcoin-super-cycle-could-bring-btc-to-1000000-in-four-to-five-years-heres-how-according-to-dan-held/

I think there will be no more cycles in bitcoin market from now onwards. Just someone was telling that these cycles things and trading indicators like RSI do not works on assets which are non inflationary. The assets like bitcoin which is fixed in quantity will keep on moving parabolically and exponentially if massively adopted.

Economy is not likely to crash. Stock market might crash because its very over valued, but with vaccine getting out next year, sane leadership in America starting Jan 20, and the gradual renormalizing of life, people will be heading back to work and the economy will start to improve slowly.

And government regulations aren't going to do anything to the market cycle. The halvings have always caused the cycle, though now we might be in for a mega cycle in the years to come rather than the standard 4 year cycle which would be coming to a close in a year.

The cycle will come when the government throws some regulations at it. We can expect some of that next year. Besides that its going to a whole pack of EVERYONE trying to get a piece of Bitcoin's a$$.

Also, there is a risk of the economy crashing and that will have an impact on Bitcoin (negative or positive unknown).

The halvings and other known issues will not cause a cycle since the market is far more mature now and will already price that in in a stable manner.

If there are indeed such cycles, and if they are tied to halvenings, then it's easy to conclude that their magnitude will be decreasing, because each halvening is less important than the previous one. And increased volumes and the decrease of the novelty factor will play some role too. I don't see any reasons why these cycles should be maintained at their full strength, though I wouldn't say that it's outside of the realm of possibility that they would.

I like the idea but I still think there is plenty of room for retail "investors" to FOMO in and create a boom/bust.  They will just be fighting over a much smaller number of coins as so many have been taken off the market by the big guys, which will drive the price up to over-inflated highs.  The big guys won't be buying at those prices and whales will start to dump/take profit, triggering the typical panic selling response.

I know most people have "heard" of Bitcoin by now, but back in 2017 you didn't have Joe Rogan reading Cash App ads every week and talking about "stacking sats", PayPal putting crypto front and center in their advertising, etc. etc. and you also didn't have free $$$ raining from the sky.

A LOT more people will wade in now who were skeptical about it before or didn't see it as legitimate enough last time around.

IMO might be the best thing is to cross the bridge when we get there, it's too early today to panic and overthink.

Anyway, I really admire this thread however, I think you have to consider other people's perspectives as well.

For those who are worried, let me share this.
Institutional investors don't need to drive the market.  That isn't how they play and the only purpose they have in investing is to save from taxes (90% of the time).  They won't care if they profit or not, as long as there is a store of value away from taxes or at least reduce it.  That would be enough.

We're rising out of market hours on a Saturday far more then the trend itself justifies, at a greater pace then we do with high volume all markets open.   If its overdone and liable to failure, its mostly the home consumers buying too much too soon is probably the bulk of the reason.   Also people compare gold and other assets to BTC but they are orders of magnitude different which makes the wholesale division from main stream buying into this asset type quite unlikely.  This isnt a criticism exactly but volatility is too high to be blaming institutions for the nature of BTC and I think they study and invest mostly elsewhere and will continue to do so for some time so their buying is light still.

Just wanted to correct you, it has indeed been 4 years, not 3 years. They cycle has been driven by the 4 year halving cycle. Boom/bust '13/'14, boom/bust '17/'18, and we are just now starting the boom of this cycle (2020 was not a boom it was the buildup to the start of the boom) so it'd be boom/bust '21/'22. 4 year cycles. I think we're gonna get the boom in '21 to perhaps around $100k, but then there isn't going to be a year long bust after that, it's gonna just keep grinding up for years, with corrections here and there, because the market thesis of Bitcoin is essentially changing from volatile speculation for risky investors to institutional-class global reserve and store of value - the latter has many trillions of dollars to allocate without the need for the crazy hype cycle that has driven the retail bitcoin market.

I see your point. But since this class of investor is just barely entering the game now, and it seems pretty obvious this is going to be a years-long trend of more and more institutional investors coming into the market and gradually buying up what they want, the demand to buy should outweigh any short term profit taking the vast majority of the time. Even the companies / investment funds that have gotten into Bitcoin the past few months, other than Microstrategy, having only been dipping their toes in and will no doubt be continuing to stack sats for a long time. They're not going to be selling anytime soon, they're gonna be continuing to buy to add to their position, and more and more will join the fray. I'm not saying corrections won't happen. But I don't see a prolonged bear market happening anytime soon, I don't see an 80% crash because it's the panicky retail market that has driven those kind of crashes, but they will be owning a smaller and smaller portion of the market cap, especially those who would jump in on a boom and panic sell on a drop.

When the big boys do take profit they are just going to be selling to a larger amount of interested institutional buyers. Yeah they're not gonna dump $10 million on Binance, they're gonna be like hey custody company we want to take some profit and sell $10 million, and the custody company will be like great we've got a bunch of clients looking to pick up that much right now.

This is just my current thinking thesis. Will be interesting to see how it all plays out in the coming years!

There is a huge chance this could actually happen. The bust cycle at least, boom is still in full on going on right now but the bust might actually stop existing very soon. Plus there is no 4 year cycle, it was 2014 and it was 2017 and it is 2020 which means the big ones happened in 3 year difference and not 4 years, I don't know why people keep calling it 4 years when in fact the big increases happened with 3 year difference.

And by the looks of it these big companies can't allow for such big falls neither, they would have to actually tell their investors that they have lost a lot of money on bitcoin and they do not want to do that, maybe stocks would be fine because market was bad at one point, but bitcoin was always risky and telling your investors you lost money on this high-tech thing will be taking too much responsibility. So I assume they will definitely buy more and more to keep it afloat.