The continuing bear market has sparked a lot of discussions. Investors are beginning to wonder whether they should sell or buy back lower. Some consider opening a short position, while others are on the brink of giving up. Jake Chervinsky is a government enforcement defense and securities litigation attorney at Kobre & Kim and he spoke recently about Institutional Investors.
He stated that while retail traders and small individual investors are selling due to the market conditions, Institutional Investors are taking this opportunity to accumulate. Chervinsky’s statements have ignited the cryptocurrency community, because Institutional Investors have been discussed many times. Of course they mostly affected hardcore crypto skeptics who obviously question the involvement of industrial investors to begin with.
Are Institutional Investors accumulating Bitcoin?
Most of the skeptics believe that the current market simply is not responding to an Industrial and Institutional Investors buy-out. According to the skeptics, if Industrial and Institutional Investors were indeed mass buying Bitcoin over the last few weeks, the market would have responded and the price would have increased.
Chervinsky explained diligently that industrial investors have learned to be very careful and it’s true that we don’t know fully the extent of the current selling. Investors are especially careful with new and unique assets. Investors often seek for an investment which will have a minimal impact on the short-term price trend of the asset.
He believes that the biggest issue is to conclude that Institutional Investors are investing and that would make the price go up. According to Chervinsky, the biggest professionals are extremely proficient in acquiring assets while having minimal to no impact on the market.
The preferred investment of Institutional investors, when it comes to speculative markets is through the over-the-counter (OTC) market. When it comes to Bitcoin, there is a need to use the services of qualified and trusted custodians like Coinbase Custody due to the low liquidity.
Additionally, Over-the-Counter market operators and custodial solution providers are not obliged to share their trading volumes. This effectively means that all data stored by OTC exchanges is almost never released to the public. This lack of information also has a downside. It’s very hard to back the claims that Institutions are buying to such a large extent.
At the moment it’s impossible to guess the intentions of Institutional Investors. Whether it’s a short-term interest or a long-term investment. At the moment the demand for Coinbase Custody, Bakkt is probably the only way to justify institutional demand of crypto. The good news is, Bakkt recently shared confirmation that the demand is growing exponentially.
We’ve wrote recently about the CEO of Binance, claiming that the Over-the-Countetr market is as large as the standard market by volume. You can read more in the link below.