Bitcoin: USD/BTC (BTC=X) Institutional Investors Are Officially Entering the Cryptocurrency Market
Now that institutional investors are buying up Bitcoin, what will it mean for the cryptocurrency market?
Much of the early draw to cryptocurrencies was the high “crypto” appeal. No governments back cryptocurrencies. Cryptocurrencies aren’t standardised against any material commodity. Institutional investors like banks and investment firms stay away from them. Right?
Institutional investors have stayed away from cryptocurrencies in the past, avoiding high volatility. Aside from the latest Bitcoin dip, major cryptocurrencies like BTC and ETH have been stable lately. As a result, some institutional investors have been gaining entry to the cryptocurrency market. Some transactions could have been done overnight. Other operations required more planning and show more intent for long term involvement.
So, which institutional investors are getting involved? What are they up to? How will this affect the crypto market?
What Are They Up To?
Bloomberg reported that institutions had replaced individuals as the largest Bitcoin buyers. Institutional investors had entered the market through organising transactions with Bitcoin miners. Specifically, “institutional miners”, who use fleets of computers to generate the digital currency.
The article also identified some of the institutional miners involved in these transactions. There was also some speculation on how institutional investors would influence the market. What the report lacked were names of institutional investors involved in the transactions. It was also unclear what they intended to do with Bitcoin and Ether that they were purchasing.
But why were institutional investors purchasing digital currencies over the counter from institutional miners? By staying off the market, institutional investors made purchases without giving away the fact that they were making the purchases. They bought bitcoins that had not been owned or used before, directly from miners. They were also able to set prices ahead of time and buy large amounts of Bitcoin. Those goals are difficult or impossible on the standard markets.
At the time of Bloomberg’s article publication, it was too early for much comment on what institutional investors were doing with their purchases. It was also too early to speculate on how institutional investors would affect the crypto market. The article did, however, discuss the “professionalization” of Bitcoin and the end of its “wild west days”.
Who Is Doing It?
Move ahead a little over a month to early November. Forbes Magazine publishes the names of some of the institutional investors involved. Names like Goldman Sachs, which started offering a Bitcoin trading product. The New York Stock Exchange is also becoming involved with a Bitcoin futures market.
Forbes also speculated that institutional investors’ involvement would increase security in cryptocurrencies. Furthermore, they suggested that institutional investors could stabilise the volatile cryptocurrency market.
What Does This Mean?
Institutional investors have tended to stay away from cryptocurrencies because the market is prone to volatility and risk. Many investors in cryptocurrencies are small-scale or investing out of a personal fortune. Institutional investors are neither of these things.
Institutional investors putting big money into cryptocurrencies may contribute to stabilising market. Yet, institutional investors reacting to market changes often makes markets more volatile. With cryptocurrencies being a volatile market, this could be particularly dangerous.
Speculation is difficult, but so is affirmation. Institutional investors waited until a period of market calm to buy in. We’ll never know what would have happened to the crypto market otherwise. Was it because of institutional investors if the market remains somewhat stable or strengthens soon? What about if it becomes less stable or fall?
Most likely, this will change the nature of the cryptocurrency market. Institutional investors could also make the market more accessible to more investors and traders. These will likely fill a place in the market between small-time investors and moguls.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 9,220.37.
The projected upper bound is: 12,888.08.
The projected lower bound is: 9,647.04.
The projected closing price is: 11,267.56.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 33 white candles and 17 black candles for a net of 16 white candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with FOREX BTC=). It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 72.4938. This is not an overbought or oversold reading. The last signal was a sell 9 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 56.39. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 8 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 7. This is not a topping or bottoming area. The last signal was a sell 8 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX BTC= closed down -513.840 at 11,196.960. Volume was 87% below average (consolidating) and Bollinger Bands were 82% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 11,463.95 9,156.23 5,540.49
Volatility: 170 99 75
Volume: 97,217 91,605 78,239
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX BTC= is currently 102.1% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume into BTC= (mildly bullish). Our trend forecasting oscillators are currently bullish on BTC= and have had this outlook for the last 16 periods.