However, over much of 2018, institutions were fleeting. But, in 2019, there’s a whole different story. In fact, according to one prominent crypto researcher, Wall Street adoption, deemed a false narrative by BTC bear Mark Dow, has finally arrived. And institutions’ arrival wasn’t a quiet one, that’s for sure.
Trader Alex Krüger recently issued a multi-part thread on why “institutional money is here,” and, more importantly, how exactly Bitcoin could fare as a result of said influx.
The well-respected analyst explained that per data he obtained, “institutional asset managers,” went “net long” on the Chicago Mercantile Exchange’s (CME) BTC futures contract over the past week for the first time since April 2018. This came as hedge funds and similar entities had record open interest on the short side, prior to getting squeezed out of their positions as BTC rallied past $4,200 last Tuesday.
Bitcoin. Institutional money is here. pic.twitter.com/ErWjz1vcDW — Alex Krüger (@krugermacro) April 10, 2019
This simultaneous influx of buying pressure and short squeeze resulted in the CME’s Bitcoin volume for the week of April 1st to 5th reaching all-time highs, in spite of the overarching bear market conditions. In shorter words, institutions seem to be back in the Bitcoin game.
In a later tweet, the analyst continued his bullish quips. He remarked that the shares of Grayscale’s Bitcoin Trust Fund, which was recently revealed to have over 1% of all BTC that will be mined… ever, have seen a monumental rally.
$GBTC 10% today, outperforming $BTC. – GBTC +47% since Apr/2 breakout– BTC +28% since Apr/2 breakout Another symptom of new money coming into crypto. pic.twitter.com/YEKXBbKLen — Alex Krüger (@krugermacro) April 10, 2019
Somehow, the shares, trading under the ticker GBTC, have outpaced the asset they are based on, gaining 10% on a day in which the cryptocurrency effectively flatlined. And this has been a trend going on for upwards of a week. Since April 2nd, Bitcoin on spot markets has rallied by 28%, from $4,150 to $5,350. GBTC, however, has nearly doubled that performance, posting a 47% gain in the past week.
This, as put by Krüger is a clear sign that “new money [is] coming into crypto.” And considering that an approximated 66% of GBTC purchasers over 2018 were institutions, it would be fair to say that whales are starting to load their Bitcoin bags once again. As Fundstrat’s Tom Lee opined in a recent interview, there is growing evidence that the copious amount of “dry powder” on the crypto sidelines is starting to get siphoned into digital assets, setting a precedent for a further move higher.
Interestingly, this seeming arrival of institutions is what a number of analysts see driving Bitcoin to new all-time highs in the coming years. In a recent episode of CNBC “Fast Money,” BKCM’s Brian Kelly, an industry commentator, claimed that institutional adoption, coupled with a growth in crypto networks, will push BTC past its $20,000 high “without question” over the next two years.
He chalks his statement up to the fact that Fidelity Investments, a renowned financial services provider, has taken an absolutely colossal interest in cryptocurrencies. A recent interview with Fidelity’s crypto chief, Tom Jessop, would confirm this.
Not only did Jessop mention that dozens, if not hundreds of staffers across Fidelity have taken an active interest in Bitcoin, but that 20% of a 450 sample had some semblance of a cryptocurrency investment. As the survey’s sample size was diverse, it could be argued that this 20% figure can be extrapolated to Fidelity’s tens of thousands of entities that make up its institutional clientele.
Bitcoin is up more than 30% this month and @BKBrianKelly says it could hit new highs by this date… pic.twitter.com/afC58AqIGW — CNBC's Fast Money (@CNBCFastMoney) April 10, 2019
While institutions are evidently returning to set up shop in the cryptocurrency ecosystem, getting some of Wall Street’s biggest names and corporations into Bitcoin won’t be an easy or quick task. As Pascal Gauthier and Benjamin Soong, two executives at cryptocurrency security firm Ledger, told NewsBTC in a recent interview, crypto is currently a modern gold rush, but with no banks, vaults, and safe makers. Gauthier rhetorically asked: “You can have a lot of crypto, but where do you put it?”
Soong went on to outline the importance of custody, claiming that while security infrastructure has moved from a state of just proofs of concepts to actual product, it may take upwards of “18, 24, or even 36 months” for a “foundational box to fall into place, bit by bit.” This foundation box will, of course, facilitate the “herd” that Novogratz has mentioned time and time again.