Topic: Will institutional investors kill the four year boom/bust cycle? - page 2. (Read 402 times)

While I get your point and it certainly is an interesting point of view, selling is part of the investment game as replies say above. Therefore, I personally think that when we have more and more institutional investors (and not only those but other regular investors as well) joining in, these cycles will actually become even more powerful than they used to be.

Beforehand, we've had newbies coming in and dumping 100s or thousands of bucks during crashes. Since there were lots of newbies dumping small amounts, the market turned into a big parabolic bear run. But today, with institutional investors coming in with billions of bucks, a single $10M dump would crash the markets immediately and provoke a larger fuss than small dumps would. Add the regular people panicking and dumping their money as well, other institutional investors dumping theirs in order to either cash in high or just planning to purchase lower and you'd have a big bomb overall.

On the other hand, this truly depends on the way institutional investors sell. I doubt it'd be a $10M order on Binance, so their moves may actually not be felt as a strong impact. But when you think about it, institutional investors publicly announcing the sale of their Bitcoin holdings could easily crash our still immature market.

Personal opinion: this is a highly speculative thing and the best thing we can do is wait for another round of 4 years (so until 2028) so that we can see whether institutional investors joining in have impacted and influenced BTC cycles differently or it's better/worse than it used to be.

Nice thread. Just saw this image on wo thread.




2.244
1.684
1.592
1.174
  .763

---

.669
.627
.600
.550
.531

the top 5 holdings = 7.457 trillion

the new 5 holding =2.977 trillion

then btc = 464 billion

to think a 10% shift from the top ten to BTC will or won't happen
Is simple.

Pretend it does and it takes the next 3 years to do so.

that would be 745.7 billion and BTC cap would grow to 1209.7

roughly 2.6x todays price of 25k or 65k

Seems easy to do.

This month Norway added 2 usd worth of BTC for each citizen  to Norway's retirement plan.  About 2 x 5 million = 10 million dollars.

But think what happens if the 450 million European Union adds a 1% vat and use it to buy BTC that would be vast numbers.

I can see a huge money shift to BTC for the next 2-4 years.  If the world wraps BTC as a driving force to make new solar and new wind plants. Along with future retirement money as a bundle.

Yeah   just real long term growth.

Running out of coins to mine has a temp fix. Just empty the old untouched accounts. Use them to be mined as second chance coins.

Many countries do this with old bank accounts they call them abandoned.

I think 3 million untouched coins could recirculate.

So in 2028 we are down to 1.12 per block
in 2032 we are down to  .56 btc per block
in 2036 we are down to .28 btc per block
in 2040 we are down to .14 btc per block
in 2044 we are down to .07 btc per block
in 2048 we are down to .035 btc per block  grab the 40 year old idle coins add to mining
in 2052 we stay the same at 0.035
in 2056 "
in 2060 "

makes coins last a long time. does not change the 21 million count.

They are not cycles, but the market by its nature gets highs and lows and it is renewed after periods of bears that may be short or long.
In normal conditions, peaks and troughs occur in the market within 5 years, during which they are times of stability, and it has been confirmed that it happened at the end of 2013, 2016, and 2020, but this means that it must happen again, especially since Covid-19 pandemic will change many investment ideas for many people.

It may create a financial crisis similar to the one that was one of the reasons for the emergence of Bitcoin (2008.)

Who knows, maybe they are planning to dump when almost all the coins are bought or not. There are a lot of things that can happen but I think that institutional investors will be influencing the prices from now on. There are more whales now, and these new ones know the inner workings of a market and the psychology behind it. In my opinion, it is still far too early for us to form a conclusive thought about the institutional investors joining the fray, the best thing that we can do as an observer is to watch what happens next.

This one, sooner or later as the price goes on a rise, the exponential growth will slow down. I have my own theory that we might see a single 6 year cycle or two 3 year cycle starting from 2018 lowest low of $3k. But definitely we will see boom/bust cycle regardless if its going to be end by institutional investors or not.

I disagree, but that's cool haha. Market is heating up now right on pace with what many expected because we expected a four year cycle. The first few years before the first halving the market was too small and volatile to have this sort of cycle and ya know a halving hadn't even occurred, but once the first halving occurred in 2012 it's clear bitcoin has been on a four year cycle. The 2013 boom, 2014 crash, 4 years to the 2017 boom, 2018 crash, 4 years to the incoming (likely) 2021 boom. That's definitely an established cycle at that point.

But I see it likely evolving now so instead of completing the cycle a year from now, the established cycle trend will cease when we don't see a crash and prolonged bear market at that point. It will evolve because of a different class of investor moving in to control a significant part of the market, an investor that isn't trying to get rich and get out, but is just looking to store value long term, with deep pockets: institutions.

The four year cycle will seem to blend away because the price is so enormously undervalued for the type of demand that is now entering the space. That demand won't be satisfied and then run away after a FOMO induced parabolic year, it'll just keep going. The price for this new type of demand would still be vastly undervalued after a typical boom year parabolic move. Institutions are looking at this as an asset that is worth 10, 20, 30 times its current value. They're not risking paycheck money on a volatile asset, they're simply moving in a tiny fraction of other invested funds. On any retail panic selling crash they can simply move another tiny fraction of other invested funds into Bitcoin and stop the crash by soaking up millions of little fish retail investors sells all at once. This is why we had no real correction at $15k, no real correction at $19k, no real correction at $24k, and are about to push over $25k, despite the fact that there is no retail buying frenzy even happening right now. And this just from a tiny fraction of institutional investors moving a tiny fraction of their money into bitcoin the past few months.

So I don't see this as a lengthening of the market cycle, I see it as: the big boys are in and to them making money is just a game. They always have more money and the amount of money they can throw around makes Bitcoin looks tiny right now, but at the same time they are starting to understand Bitcoin is where they will ultimately preserve their money. There's a reason the stock market shot to record highs after Covid panic crash despite economy in the gutter, because big money controls the stock market and its just a game to them to make more money. They will control the bitcoin market - within a few years they will probably own close to half the accessible supply - which will vault the price up well over an order of magnitude, and they aren't gonna panic sell all their coins like a FOMO'd in average joe would do. But that's okay, because Bitcoin is just as useful for each owner no matter how much else is owned by whoever. Eventually Bitcoin might be ripe for an actual bear market again, but in the meantime it'll probably be several years of mostly grinding upwards as big money gets its hands on the supply. There won't be an end to the current cycle until they've reached some satisfied point in which they are okay taking some profit off the table, and that could be 5 years from now at like 20x the current price.

That's my new thesis at least.

There was never any 4-year cycle.

There were 2.5 years between the 2011 and 2013 tops. There were 4 years between the 2013 and 2017 tops. Even if the next cycle topped in December 2021, 2 out of 3 doesn't make a pattern.

One of my hypotheses (which doesn't really fit with my S-curve theory) is that these periodic exponential growth cycles have been, and will continue to, slow down. If the rate above keeps up, the next cycle will take closer to 6 years to complete, rather than 4.

It's only hard to guess the market when it trades sideways - if the trend has been established, it's easy to follow it, especially if you come early. It's true that institutional investors won't panic sell, but this doesn't mean that they won't sell at all, taking profit is a part of trading, and trading for short or medium term is just as valid as trading long term.

What if institutional investors didn't come here to break the cycle, but to ride it? In that case, it will be a self-fulfilling prophecy - the cycle will happen again, because investors expect it to happen.

I've been thinking about this for a while. We're used to a four year boom/bust cycle (well by used to I mean we had one and seem to be getting ready to close out another in a year). And more generally, we're used to parabolic bull runs of hundreds or thousands of percent, followed by ~80% crashes

But I'm wondering if institutional investors will change this dynamic.

The normal parabolic run, blow-off top, and enormous crash and long lasting bear market happen because retail investors FOMO into Bitcoin during a bull run, and then when it starts crashing they panic sell out of it, and leave the market for a long time.

But things are different now:
1. Institutional investors are driving the price appreciation right now, and as time passes they are going to own more and more of the bitcoin supply.
2. A significant portion of the retail market (general public) has known about bitcoin since 2017.

Why are these two things important and possible game changers to the overall market dynamics?

Well, institutional investors will likely hold long term, on the order of many years, and are unlikely to panic sell their slowly accumulated investments when they see the price going down. Here I'm talking about corporations and investment firms/funds. They make long term decisions, will build their positions in Bitcoin slowly over months or years and are thinking 5, 10, 15 years from now. They spend months researching, discussing, and approving the decision to get into Bitcoin in the first place. They aren't thinking about making a short or mid-term trade and trying to guess the market. They are accumulating. Some others like accredited individual investors who are buying through Grayscale might dump out of fear when they see a crash, but these are the types that are investing 5, 6, or maybe 7 digits. The firms investing 8, 9, or 10 digits are building long term positions. This means enormous amounts of bitcoin are going to be held for many years, and will not simply be dumped in typical 4-year cycle crash in 2022. What Bitcoin used to be in the hands of panicky retail investors who FOMO'd into the market late in a bull run and are trying to get out on a crash without too much of a loss, will now be held by corporations and investment funds who are looking at Bitcoin as a global asset class that is vastly undervalued right now and rather than dumping their coins they will be looking at accumulating more on a major pullback. Panicky retail hands -> long term institutional hands.

The second thing is that the general pubic mostly has known about Bitcoin for 3 years from now. And because they only heard about it in 2017, watched it go up for a few months, and then saw it crash and remain below its late 2017 price for 3 years, they mostly think about it as "something that always crashes". Whereas previous bull runs always brought in lots of new people who had never heard of Bitcoin before, and were therefore ripe to FOMO into it, now people already learned about it in 2017 and the amount of new people FOMOing in, as a ratio to the amount of people already into Bitcoin, will likely be far smaller. You're not gonna suddenly have 10x as many people buying Bitcoin cuz the price is going up, it'll be a far smaller increase. This means the general public will come in more gradually, rather than all at once every few years. This - I believe likely - fact, will making giant blow-off tops on top of parabolic runs much less likely, and therefore giant 80% crashes and prolonged bear markets much less likely. And for that smaller ratio of people who FOMO'd into the market who then panic sell on a correction, well the billion dollar hands of investment firms will be scooping up their dropped bags, as stated above.


These two things together I think will lead to less exaggerated parabolic bull runs, smaller blow-off tops, more shallow crashes and shorter bear markets that look more like serious corrections than full-on bear markets (think second half of 2019, as compared to a 1-2 year bear market and bottom like after 2013/2017).

And because institutional money is so enormously big compared to the money that has come into Bitcoin previously, and because it will take them many years to gradually get into Bitcoin simply because they are mostly risk adverse and the Bitcoin market is simply too small and illiquid at this point for them to plunge headlong into, it is going to be a continuous grind upwards, with corrections and sideways periods along the way, rather than absurd parabolic increases followed by soul crushing crashes.

If you want an example of this already, just look at the past two months now that institutional money has started to become a driving factor. After going from $10k to $16k, it would have been commonplace for Bitcoin to go back to the last well established level at $11k, instead it could only manage a quick bear trap to $14k and then went to $19k, after which it could only manage short bear traps to $16k and $17k during a month of sideways action instead of a reasonable correction to $11k-$13k to establish support. It then went to $24k, and so far it has only managed a couple quick bear traps to $22k and very well could push to the $25k-$30k region in Jan/Feb. The reasons for this is clear, with corporations starting to make Bitcoin purchases, investment firms starting to tiptoe into the market with 9 figure buys, and accredited investors through funds like Grayscale buying 9 figures on a weekly basis, there simply isn't enough supply to allow normal expected deep corrections, these coins will mostly be held long term, and the number of coins held by these entities will grow massively thus making the emotions of retail investors much less significant in driving the volatility of the market. This all points to a massive grind upwards in price in the years to come and a shredding of the previous boom/bust market dynamics inherent to excitable retail investors.

Basically, if this thesis of a changing market dynamic for Bitcoin is correct, don't expect a massive bull run to $150k or something in the next year followed by an 80% crash in 2022. Instead, expect a generally increasing price year after year. In this model, Bitcoin likely goes to mid to high 5-figures in 2021, but no great crash ensues, then it moves over $100k in 2022, maybe hitting a quarter million in 2024, and so on. At some point in there we could see several-month corrections occur if moderate bouts of retail frenzy ensue, but it won't be like previous market cycles, at most it'd be like the second half of 2019 when the market just got over-excited in April/May/June and pumped things too hard and then price took a half year to settle back down to what a reasonable shot out of the bear market would have taken it, before it started moving up again. Except I don't think such corrections would last half a year with institutional money consistently sucking up coins. The price will simply continue grinding upwards off and on.


What are your thoughts?