Institutional investment is playing a bigger role in Bitcoin’s recent increases in value than it did when the cryptocurrency hit all-time highs in late 2017 and early 2018, according to high-profile traders.
Joe DiPasquale, CEO of cryptocurrency hedge fund BitBull Capital, tells Forbes that the 2019 bull run is displaying different characteristics than the retail-fueled mania in 2017.
“Bitcoin price grew rather steadily in the first quarter of this year as compared to the violent movements of late because the sentiment shift was not retail oriented.
We believe institutions were actively buying Bitcoin since its lows late last year and retail investors only joined in once major psychological barriers were broken, namely the $10k level.”
Cole Walton, co-founder of Plouton Mining and head trader at Kanos Capital Management, notes that Google searches for Bitcoin have yet to spike, indicating the latest resurgence hasn’t been fueled by retail investment.
They aren’t the first crypto insiders to note the shift. Oliver von Landsberg-Sadie, founder and CEO of BCB, a cryptocurrency prime broker that caters to institutional investors, recently told Coindesk that his company brought nine financial institutions located in the UK into the crypto market. They now have 32 banking and over-the-counter trading institutions on board, most of which entered the fold this year.
Dave Hendricks, co-founder and CEO of digital asset management platform Vertalo, says the crypto market’s maturation has played a role in bringing more institutional investors on board.
“During the 2017 run-up, Bitcoin didn’t even have a futures market in place… In the 18 months since the ATH, many more institutions have started following and investing in BTC.
With new leverage products and a more sophisticated buyer base, it’s possible for larger leveraged orders to impact the market.”
The Chicago Mercantile Exchange reported last month that May showed massive growth with 223 new trading accounts, making it the most successful month for its Bitcoin futures product since launching in December 2017. Meanwhile, Binance, the largest cryptocurrency exchange by trading volume, just introduced margin trading in response to high demand from institutional traders.