Bitcoin has long been described as a movement to phase out institutions. But ironically, it is institutions that many cryptocurrency investors have claimed to rely on to boost Bitcoin to fresh all-time highs.
And while it is believed that institutions have yet to allocate significant levels of financial and human capital to the crypto market, an industry executive recently cited hard evidence to suggest that this subset of investors is already entrenched in this market.
Institutions are Involved in Bitcoin Now, Crypto Exec Asserts
Grayscale’s director of sales, Rayhaneh Sharif-Askary, said that institutions remain involved in the industry. She said that out of the $85 million that the cryptocurrency firm, owned by Digital Currency Group, raised in Q2, 84% was sourced from institutional investors. On this, Sharif-Askary remarked:
“I get asked this a lot; there is this rhetoric in media of when institutional investors are going to get involved, when they are gonna start investing. It’s ironic because we see institutional investors investing with us all the time and that’s been the case for a long time now.”
This isn’t the only sign that institutions are dipping their toes in the cryptocurrency waters.
As reported by Blockonomi previously, TokenAnalyst found that fewer retail traders have been involved in this rally than in 2017. The firm found that the number of unique addresses sending Bitcoin to known platforms like Binance and BitMEX has been on the decline. Sid Shekhar, the co-founder of TokenAnalyst, said the following on the statistics:
“[The low number of incoming transactions suggests a] lack of retail interest in general currently in crypto. If we go by the ‘Bitcoin as safe haven in times of recession’ narrative, the number of new users/buyers should actually be increasing.”
To further corroborate this, analytics provider The TIE found that in June, Bitcoin was trading at its highest price-to-Twitter mention ratio ever. The firm claimed that this is a sign that retail hasn’t been as influential in this rally as in 2017. Instead of retail, The TIE implicated institutions.
Not All Signs Point to “Institutional Herd”
While Grayscale has seen continued institutional demand, it isn’t clear if this is the case in other corners of the cryptocurrency market.
In late-September, Bakkt finally launched its Bitcoin futures market. While the platform was slated as a medium through which a “critical mass” of institutions could get involved in Bitcoin, Bakkt’s market has largely underperformed the expectations of investors so far, hosting around $500,000 to $1 million worth of trade volume each day.
That’s not all. The Chicago Mercantile Exchange’s Bitcoin futures market, which has long been a hotspot for institutional investors involved in cryptocurrency to trade, has seen its open interest reading fall by over 50% since June’s peak.
Not Needed for “Moon”
So, this may leave you wondering — will institutions make or break Bitcoin?
According to Lou Kerner, a partner at fund Crypto Oracle and a former Goldman Sachs analyst, no.
In a recent episode of CNBC “Power Lunch”, the investor explained that Bitcoin doesn’t need institutions to succeed and rocket higher, citing the fact that a majority of the asset’s growth has been retail-based.
Kerner even went as far as to say that the institutions will be the followers in this market, not the trailblazers.
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