How Do You Know When Whales Are Accumulating?
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While the cryptocurrency market has seen its fair share of ups and downs in recent months, it seems to have slowly reigned in attention from big players.
From a survey released by Fidelity Investments, around 22% of institutional investors have confirmed to have some exposure to digital assets, with investments spanning the past three years. Additionally, the survey also reveals a consensus of four out of ten respondents being open to future investments in digital assets for the next five years.
Though bittersweet, this might explain the very little market action happening for retail investors. After all, institutional accumulation is known to happen simultaneously to periods wherein the rest of the traders are simply waiting for possible market activation. While many investors often question the legitimacy of institutional investors actually buying despite the decrease in the price on exchanges, a study of major institutional investors and their past behavior can help put some of these questions to rest.
To illustrate, Bitcoin’s price back in October 2018 was recorded to decrease by an alarming 35 percent. Around this time Jake Chervinsky, a securities litigation lawyer at Kobre & Kim, declared that this was due to several institutional investors accumulating whilst retail investors were selling.
Chervinsky even went on to explain that the bigger investors were carefully accumulating new assets behind the scenes in a way that would minimize its effect on short-term price trends, such as through simultaneously hedging in on other markets in order to reduce risk.
Aside from Bitcoin’s own history, known Bitcoin investors such as James Richman, Bill Miller, and Michael Novogratz can also be studied to verify this market behavior.
James Richman is a billionaire whose ultra high net worth clients laud his wisdom in investment, as seen in his investments in diversified ventures that goes from private equity to commodities. Richman is also known to be one of the major figures behind emerging technologies such as Blockchain.
Another example is Michael Novogratz. As CEO of Galaxy Investment Partners, one of his cryptocurrency investment firms, Michael Novogratz announced that almost 20% of his net worth is in BTC or ETH back in 2017. Novogratz was quoted to have approximately $250 million revenue brought to him by cryptocurrencies during 2016 to 2017, and last July 26, 2019, suggested that interest from institutional investors would cause Bitcoin to reach a new record at more or less $20,000.
In addition, Bill Miller, a billionaire whose hedge funds was reported to have rapidly increased by a whopping 46% due to Bitcoin, swears by Bitcoin as one of his favorites because he doesn’t correlate to more traditional markets.
With Bitcoin initially bouncing between $9,000 to $13,000 before finally settling between $9,000 and $10,000 for weeks on end, many traders have taken to their local communities, waiting for vindication following Facebook’s announcement on the Libra coin launch.
Meanwhile, Grayscale Investments released a study showing 36% of American investors considering buying Bitcoin, representing a potential of over 20 million investors. Fortunately, the study also shows that the increase in institutional accumulation has little influence over the number of retail investors, which usually stays constant over the next immediate years.
Taking all of these together, it may very well stand to reason that the current Bitcoin price wouldn’t stay much longer in its current position and that a welcome change of pace might be ahead for those who keep a keen eye on the current market trend.