What crash? Institutional investors have been buying up bitcoin all year

Posted: 20 July 2018 12:48 pm
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Every price drop is accompanied by a new wave of interest from the big money.

Anyone who's been following cryptocurrency is probably well aware of the pronounced slump that hit the markets as the December-January bubble burst, and the exuberance faded.

This was perhaps an entirely expected outcome. By some estimates, maybe half of everyone who's touched cryptocurrency to date jumped in during the December-January highs and was badly burned by the inevitable readjustment. So, most people didn't have a very pleasant start to their crypto journey, and then those who didn't get out were forced to buckle up for a six month bleed.

Institutional investors have remained entirely unphased though, and by every measure, their interest has grown rapidly.

One sign of this is the slightly outrageous growth of the institution-oriented OTC scene for big trades. Another sign is the institutional investors who have explicitly said that they are still very much into cryptocurrency and are using the downturn to put more money into it.

And a third sign might be the Grayscale Digital Asset Investment Report for the first half of 2018, which comically presents staggering losses of about -40% to -70% across the board next to charts of ongoing growth, constant demand and average inflows of $9.55 million per week.

Of that, the majority (56%) is from institutional investors, and the majority ($6.04 million) is going to bitcoin.

The timing of Grayscale's inflows isn't coincidental either, meshing solidly with prices to suggest that the downturns see a wave of accumulation, while the inflow dries up when prices rise.

There was little interest in January while the markets were inflating, but the money came roaring back after it hit the apparent bottom in February. The two biggest weeks of the year were in February as buyers hoovered up the suddenly-much-cheaper crypto.

Then the next major influx in the March rise happened right as the contrarian bitcoin Misery Index was saying buy. Those mounting investments throughout June, then, came right as cryptocurrency prices reached their lowest point of the year. The prices might paint a morose picture, but they clearly don't reflect how much interest there is in cryptocurrency accumulation.

Of course, almost all of those (seemingly) smart (at the time) buys have been losses so far, so who really knows whether any of this was a good idea.

The interest is undeniable though, and it's clear people aren't deterred by 2018's year to date losses. Grayscale notes that 2018 overall has been an especially busy year, pulling in more than any other year.

"The pace of investment into Grayscale products has accelerated to a level that we have not seen before. In fact, we raised nearly $250 million in new assets in the first half of this year, marking the strongest inflows of any six month period in the history of our business."

This might be a lingering result of the peak cryptocurrency hype in late 2017. The astronomical rise was simply impossible for any institutional investor to ignore, which may have had the effect of essentially forcing people to take a good hard look at the technology, and then choosing a side.

Those who liked what they saw are clearly still accumulating. And those who didn't can keep talking about drug money, lack of inherent value and all the other usual points until the cows come home.

Digital money talks, even if everyone hears it in a different way.

Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, ADA

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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