The past two weeks have turned into a bear market, the likes of which the crypto market hadn’t witnessed in a long time. The top cryptocurrency has experienced its worst sell-off in 2018 dropping over 35 percent within the short period.
However, according to Jake Chervinsky, a securities litigation attorney at Kobre & Kim, while retailer investors are panic selling, institutional investors are busy accumulating Bitcoins.
He wrote:
“Investors, with Bitcoin trading under $4,000: Retail: ‘should I sell and buy back lower? Should I open a short? Should I just give up? Is it going to zero? was this whole crypto thing a scam after all?’ Institutions: ‘please keep selling us cheap bitcoin. thank you.’”
If Institutional Buyers Are Buying, Then They Are Doing It Silently
The statement by the attorney led to a series of debates within the crypto community that was mostly triggered by the skeptics. Many of whom questioned the involvement of institutional money in the market due to the lack of momentum among the major crypto assets.
Many questioned why BTC had tanked so much if institutional investors were involved instead of its price rising.
Chervinsky who is also a government enforcement defense attorney goes on to explain that institutional investors and professional traders are highly cautious when it comes to accumulating new assets. They often invest in a way that has minimal impact on the short-term price of an asset.
“The problem, however, is concluding that ‘because institutional investors are buying, the price will immediately go up.’ Professional traders are experts at accumulating assets without affecting the market,”
Adding:
“None of the investors & traders I’ve worked with take naked long positions on speculative assets. When they buy spot, they simultaneously hedge in other markets to reduce risk. ‘Hope’ has nothing to do with it.”
It’s vital to note that when it comes to speculative assets, institutional investors will invest through the over-the-counter market (OTC). So they are likely to rely on trusted custodians like Fidelity and Coinbase custody.
For now, though, it’s difficult to prove that institutional investors are accumulating BTC however it could be true given that OTC market operators are not obliged to reveal their trading volumes.
