“The institutional herd is coming” is a phrase uttered by countless Bitcoin bulls ad nauseam. They believe that the arrival of this subset of investors will be a catalyst that drives cryptocurrencies to fresh all-time highs and catapult the technology into the mainstream.
However, an industry venture capitalist has argued that the institutional narrative is flawed, in that the Bitcoin price doesn’t need, say, Wall Street or its Asian equivalent to succeed and grow.
Related Reading: Report: Institutional Investors Are Behind Latest Bitcoin Rally; But Will BTC Keep Climbing?
Bitcoin: No Institutions Needed
On Monday of this week, Bakkt had the first full-day trading session for its physically-deliverable Bitcoin futures. The investment vehicle, expected to be the catalyst that brings BTC to new heights, seemingly flopped, seeing less than $1 million worth of volumes on Monday.
Many have since questioned the viability of the institutional narrative, and thus the future of Bitcoin.
But according to Lou Kerner, a partner at fund Crypto Oracle and a former Goldman Sachs analyst, this isn’t the case. In a recent episode of CNBC “Power Lunch”, the investor explained that Bitcoin doesn’t need institutions to succeed and rocket higher, citing the fact that a majority of the asset’s growth has been retail-based. Kerner even went as far as to say that the institutions will be the followers in this market, not the trailblazers.
Yet, he did admit that institutions will eventually make a true foray into this market, claiming they will be attracted to cryptocurrencies like apples are attracted to the ground.
While Kerner believes that institutions are not essential for the future success of Bitcoin, it is important to note that the data suggests that this subset of crypto investors were integral for the price rally from $3,500 to $14,000 observed earlier this year.
Bloomberg, citing data from blockchain analytics firm TokenAnalyst, recently wrote that fewer retail traders have been involved in this rally than in 2017. The data suggested that the number of addresses using Bitfinex has reached a two-year low; Binance has seen incoming BTC transactions fall to early-2018 levels. Sid Shekhar, the co-founder of TokenAnalyst, said the following on the statistics:
“[The low number of incoming transactions suggests a] lack of retail interest in general currently in crypto. If we go by the ‘Bitcoin as safe haven in times of recession’ narrative, the number of new users/buyers should actually be increasing.”
Google Trends data corroborates this analysis. Below is the search interest for the term “Bitcoin” from the start of 2017 to now. In it, you can clearly see that interest in the leading cryptocurrency spiked in late-2017, when BTC started to reach levels where it is currently trading now.
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