The old adage “the cryptocurrency market is not for the faint of heart” was recently shown full screen when the industry’s total market capitalization plunged to a relatively low $1.75 trillion on September 20th, only to make a confident comeback. However, despite all these fluctuations, demand from institutional investors remains strong, and reports indicate that players have continued to “buy” lately, especially after the recent general ban in China that allowed bears to dominate the market. shorter.
To further clarify, a recent report from CoinShares showed that digital asset investment products brought in $95 million for institutional crypto investment products during the last week of September, with Bitcoin (BTC) and Ether (ETH) in the lead, respectively, at 50.2 million. USD and USD 28.9 million for inflow. In fact, on average over the past 30-day period, inflows into bitcoin products have increased by as much as 234% per week.
It should also be noted that since April, US investment bank Morgan Stanley has doubled its total holdings in the Grayscale Bitcoin Trust (GBTC), which arose when the financier submitted a report to the US Securities and Exchange Commission (SEC) on September 27.
Finally, the investment management giant Ark Invest, led by CEO and cryptocurrency Katie Wood, bought GBTC, and the company recently acquired more than 450,000 shares of GBTC through two different acquisitions, leading to a massive move of 8.3 million GBTC shares.
Institutional demand is rising
To better understand how active institutional players are in their cryptocurrency, Cointelegraph contacted Luke Stryers, chief commercial officer of crypto options exchange Deribit. He confirmed that major banks such as Morgan Stanley, Citi and Goldman Sachs have started offering a wide range of digital assets to their clients, adding:
“We don’t see them active on offshore derivative platforms. However, we do see second-tier companies, asset managers and hedge funds getting more active, whether they are actively investing/trading or alternatively securing their venture capital investments.”
In support of his statements, he indicated that today about 20% of the volume of Deribit options is traded as an OTC block, while earlier this figure was in the range of about 5-10%. “Given the volume of these transactions, which clearly indicates the participation of institutional parties, the performance of these transactions in a single block is better than the performance of multiple transactions on screen,” he explained.
Finally, Stiggers noted that traditional financial institutions prefer futures and options trading over perpetual offerings, which are often seen as short-term impact products due to the unpredictability of financing. “Deribit has a greater open interest in futures for many of our colleagues, as about 80% of our volumes are determined by institutional arrangements,” he said.
Play the long game
Elena Sinelnikova, co-founder and CEO of Ethereum aggregation platform Metis, told Cointelegraph that too often retail investors ignore consolidation periods and only turn their attention to the crypto industry when the market is pumping. On the other hand, institutional investors know that the best time to go up is when the market is moving lower and/or standing still, indicating their longer-term prospects. She said:
“We’ve been through enough market cycles to know that the drawdowns we’ve seen in recent months often happen before a big rally. While no one can predict the future (in crypto or otherwise), institutions use this period of silence to load the bag in anticipation of the next big move.”
In addition, Sinelnikova noted that investors should remember that different stages in the market can give completely different results. “Follow the bitcoin dominance data to see if BTC or altcoins (or both) are driving the next movement in the market,” she said.
A somewhat similar view is shared by Douglas Horn, chief architect of the scalability-focused Telos blockchain network, who told Coitnelgraph that institutional investors can be compared to supertankers — that is, it takes a lot of time and energy to get them moving, but when they do, it will be It’s hard to stop them again. He said:
“Now that they have made the decision to switch to crypto, they will not be discouraged by any temporary fluctuations. If anything, they will be less hesitant about collecting cryptocurrency during a recession. When these investors bought their first bitcoin, they may have spent years in Evaluate their list and goals and develop strategies for them. They operate completely differently from regular cryptocurrency investors and traders.”