Is Bitcoin “Uninvestable?” Tell That to Large Institutions with Massive Pockets Coming In
Short-term bearish sentiments are valid with the potential to revisit $27k but on larger time frames, bears are just being “clueless”.
Even since the January 11th correction, the price of Bitcoin has been range-bound between $30k to $40k and consolidating around $35,000.
Yesterday’s drop to $33,300 and today even lower to $31,250 actually has the “bullish wedge “toast,” and although there is still plenty of support available, it is “not a great sign for the short term,” noted analyst Mati Greenspan.
However, this won’t surprise the market as there have already been calls for a retest of $30,000 and a possible drop to even $27,000 before BTC climbs back on the bulls.
In the meantime, Wall Street is calling long Bitcoin the most crowded trade, with JPMorgan feeling $40,000 needs to be reached soon for bullish continuation. But on-chain activity shows investors remain bullish with BTC continuing to move out of the exchanges at a record pace.
Very few are already in
Meanwhile, some say that the ongoing market is discouraging investors from buying in, Barclays’ Chief Market Strategist Gerald Moser being one of them.
“While it is nigh on impossible to forecast an expected return for bitcoin, its volatility makes the asset almost ‘uninvestable' from a portfolio perspective,” Moser told Financial News Tuesday.
According to him, volatility in the Bitcoin market is similar to other risk assets like oil, and “many would probably throw the cryptocurrency out of any portfolio in a typical mean-variance optimization.”
Moser further believes that instead of institutional money investing on a long-term basis, the leading cryptocurrency's performance has been “mostly driven by retail investors joining a seemingly unsustainable rally.”
This, however, is simply not the case. “Large institutions with massive pockets are coming. Very few are already in,” said trader and economist Alex Kruger.
Many already testing the waters
This week alone, another record amount of Bitcoin has been bought by the world’s largest asset manager, Grayscale Investments, which now holds 3.4% of Bitcoin’s circulating supply. This week alone, GBTC bought 25k Bitcoin.
Not to mention, BlackRock has jumped in as well.
The world’s largest asset manager BlackRock with $7.8 trillion AUM, filed with the SEC on Wednesday to add Bitcoin derivatives as an eligible investment to two funds.
This will be the money manager’s first time allowing its clients exposure to cryptocurrency. For now, the company is testing the waters as the exposure is for cash-settled Bitcoin futures that don't involve the delivery of the underlying asset, actual Bitcoin.
This was a big pivot from the company’s CEO Larry Fink’s comments in 2018 when he said the firm's clients weren’t interested in crypto. However, this doesn’t come as a surprise amidst the heightened interest from institutional investors and BlackRock CIO Rick Reider saying last year that Bitcoin has the potential to replace gold and is “going to be part of the asset suite for investors for a long time.”
All of this means one thing, you can be bearish on Bitcoin in the short term for “tactical reason” such as excessive leverage, high funding, steep futures curve, excessive implied volatility, Treasury Secretary-nominee Janet Yellen’s commentary on crypto’s use in illicit financing, and miner flows. Still, Kruger says, on larger time frames, bears are just “clueless.”