Cryptos may have taken it on the chin big time over the past two weeks, dropping billions in market cap, while even Bitcoin shed 20% of its valuation, but crypto investors can still smile in coffee rooms across the globe, since their BTC returns were 110% to date. These figures include recent losses, as well, but when compared to stocks or lowly T-Bills, there is no comparison. If you were frightened by the chaos this year and went to cash to avoid negative interest rates, Treasury Bills would have earned you 1.6%. Tech stocks and the S&P 500 index fared better, 31% and 21% respectively, while even Gold posted a positive result of 17%. Bitcoin returns were multiples of these figures – Hooray!
For crypto investors, it is easy to lose perspective. Volatility is one reason. A narrative that has as many twists and turns as a rollercoaster ride and that changes with the wind is another distraction from reality that must be endured. As of now, however, it is difficult to discount what a great year this has been for the world’s favorite digital asset.
After that pat on the back for the first three quarters of 2019, it is also time to assess where we are and what might be coming for the last quarter of the year and beyond. Over on the equities front, investors are also licking their wounds, after falling right in line with BTC and its altcoin brethren. Bitcoin tends to react more violently than do stocks for good reason, but Tom Lee at Fundstrat may be correct in his proposition that the prospects of Bitcoin are tightly linked to what happens on the S&P 500.
The big mystery, as far as Bitcoin is concerned, is what exactly is happening in the coffee rooms and hallways of institutional investors, where surely Bitcoin is a topic of conversation? No one in the investment world can ignore forever the returns that have been made in the crypto-verse. Even if they try, their clients will begin asking questions before too much longer, and now at the end of another quarter, when earnings season looks bleak, questions will be asked.
Keld van Schreven, a director at KR1, a London-based cryptocurrency-focused investment firm, spoke to this issue with reporters from Coindesk:
Bitcoin’s been around long enough now where people are more familiar with it. Yep, it swings wildly, but they might know other people who have bitcoin, and say to themselves, ‘Hey, they’ve done pretty well this year.’ It’s always down to fear of missing out.
What is needed is a better “intelligence network” that can assess what is going on behind the veil that hides the decision-making apparatus of institutional investors. There have been all manner of surveys of “Big Players” to determine their prevailing level of interest. With each edition, the message has been more awareness and a greater desire to participate and even a higher level of already having positions in the crypto market.
There have also been two separate attempts to measure the market sentiment of the large investment crowd, either by tracking the proclivity of Bitcoin and crypto to appear in financial headlines or social media, or by tracking the “premium” over “spot” paid to purchase a position in the Grayscale Bitcoin Trust. In both cases, crypto interest has been shown to have beeb waning, but this commentary was also true for stocks and could also be too U.S.-centric a measure for broad use.
If you cross the Atlantic, the London-based firm, BCB Group, which focuses entirely on institutional clients that want access to the crypto market via an Over-The-Counter route, has noted in a report that: “Institutional investors are more “forgiving” than we thought”. Daniel Fruhman, one of the company’s directors, told LiveBitcoinNews that:
Many investors opt for “over-the-counter” purchases, as there tends to be little to no liquidity on exchanges.
Weekly turnover over ranges between $10 million and $100 million for BCB.
As we gain more insights into institutional participation in the crypto space, the picture does grow clearer. This group is interested, but they tend to be more conservative and slower moving than the chaotic frenzy of the crypto-verse. Patience will be rewarded.