{"id":261619,"date":"2021-05-28T18:44:00","date_gmt":"2021-05-28T15:44:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast\/"},"modified":"2021-05-28T18:44:00","modified_gmt":"2021-05-28T15:44:00","slug":"for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast\/","title":{"rendered":"# For the long haul? When Bitcoin nosedived, institutions held fast"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2f8677e1668\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2f8677e1668\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast\/#Did_Musk_see_the_writing_on_the_wall\" >Did Musk see the writing on the wall?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast\/#Was_the_correction_overdue\" >Was the correction overdue?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast\/#A_blue_ribbon_for_DeFi\" >A blue ribbon for DeFi?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast\/#%E2%80%9CMaking_a_generational_bet%E2%80%9D\" >\u201cMaking a generational bet\u201d<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># For the long haul? When Bitcoin nosedived, institutions held fast <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDUvZTJjNGI4NjQtOTI2MC00ODhiLWJiM2ItNTQyM2NmZWQxNzU2LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>Mid-May\u2019s price plunge was one of crypto\u2019s wildest pullbacks in recent years, a tumble that eliminated nearly $1 trillion from crypto\u2019s market value.\u00a0<\/p>\n<p>The industry had soared to new heights a month earlier, with Bitcoin (BTC) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2021\/04\/13\/bitcoin-hits-new-all-time-high-above-62000-ahead-of-coinbase-debut.html\">reaching<\/a> almost $64,000, driven in good part by institutional investors. Now that some calm has returned to the market, bears are asking: <em>How did institutions behave during the recent collapse?<\/em> <em>Did they jump ship or hold firm with their investments?<\/em> And <em>what impact might the pullback have in future institutional participation in the cryptocurrency and blockchain industry?<\/em><\/p>\n<p>\u201cInstitutional investors mostly held firm,\u201d Oanda senior market analyst Edward Moya told Cointelegraph, \u201cand after the dust settled, [investors] still seemed confident with their longer-term bets.\u201d Also, Chainalysis chief economist Philip Gradwell <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/markets.chainalysis.com\/reports\/2021-05-19\">wrote<\/a> in a May 19 market analysis, \u201cIt also does not <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ear that institutions are significant sellers, although they may be more cautious as buyers right now.\u201d<\/p>\n<p>On the other hand, analysts from JPMorgan told their clients that institutional investors abandoned Bitcoin for gold during the swoon. And then there was Elon Musk, whose May 12 tweet said that Tesla would no longer accept Bitcoin in exchange for its automobiles \u2014 citing concerns about BTC\u2019s energy consumption \u2014 was blamed by many for accelerating Bitcoin\u2019s market descent. It was already declining but fell another 40% after his tweet and has since had trouble recovering to reclaim $40,000.<\/p>\n<p>Economist Gradwell sought to put things in some historical context, noting that Bitcoin inflows to exchanges were relatively low compared with past sell-offs. This suggested \u201cthat much of the selling is from people with assets already on exchanges, which tend to be retail investors.\u201d<\/p>\n<p>Many crypto veterans appeared to agree that the volatility was propelled by retail investors \u2014 not institutions. Anyblock Analytics GmbH\u2019s co-founder and chief data officer Freddy Zwanzger told Cointelegraph that \u201cinstitutions <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly have long-term goals, so if anything, they would use recent price swings tactically \u2014 and most likely to buy into the market at lower prices.\u201d<\/p>\n<p><a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Social media<\/a> seemed to reinforce this view. Zwanzger continued, \u201cOn Crypto Twitter, I also saw many retail newbies panicking trying to sell, and all OGs commenting on the bargains they\u2019ve got in yet another volatile swing that has happened before and will happen again.\u201d He added:<\/p>\n<blockquote><p>\u201cPractically everyone I know in the industry did buy \u2014 or tried to buy \u2014 the dip, glad to expand their crypto holdings.\u201d<\/p><\/blockquote>\n<p>\u201cOn-chain data does show that BTC moved from newer wallets to older wallets, which suggests that newcomers capitulated,\u201d Bobby Ong, co-founder and chief operating officer of crypto data platform CoinGecko, told Cointelegraph, adding: \u201cHowever, it is also important to note that during the dip, BTC on Coinbase was trading at a premium, while huge outflows were also seen coming out. This suggests that certain institutions were buying the dip, but it is likely to include some institutions capitulating.\u201d<\/p>\n<p>\u201cOn balance, our clients saw it as an opportunity to rebalance and add to positions at lower prices,\u201d Bitwise chief investment officer Matt Hougan told Cointelegraph. Bitwise, which serves primarily financial advisors and other professional investors, had net inflows throughout the pullback. <\/p>\n<p>Jeff Dorman, chief investment officer of Arca \u2014 a digital asset management firm \u2014 sought to clarify some of the ambiguity, noting that the term \u201cinstitutional investors\u201d is often misused, telling Cointelegraph:<\/p>\n<blockquote><p>\u201cIf you include macro and quant hedge funds as institutional investors, they were largely selling momentum, but the traditional institutional investors \u2014 pensions, endowments, family offices, etc. \u2014 were trying to allocate and were not shaken by the volatility.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Did_Musk_see_the_writing_on_the_wall\"><\/span>Did Musk see the writing on the wall?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Musk\u2019s May 12 tweet was blamed by many media accounts for setting off the crypto plunge, but not everyone was ready to incriminate the Tesla CEO, who had <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/elonmusk\/status\/1392602041025843203?s=19\">written<\/a>, \u201cWe are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.\u201d<\/p>\n<p>According to Moya, \u201cthis month\u2019s cryptocurrency collapse stemmed from heightened leverage trading across Asia, panic selling from mostly new retail traders and active money managers who just rode momentum.\u201d While Hougan largely agreed that the primary driver of the pullback \u201cwas liquidations of overleveraged retail investors,\u201d he also cited rising regulatory risk and \u201cChina\u2019s view towards crypto,\u201d which seems to be deteriorating. <\/p>\n<p>Regarding Musk specifically, Moya had a somewhat different take. \u201cInitially, I thought this was a terrible flip flop by Musk and ultimately very bad <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> for Tesla and Bitcoin. After thinking it through, I believe that Musk saw the writing on the wall that the media was getting closer to calling out Bitcoin and its environmental impact.\u201d He further added: <\/p>\n<blockquote><p>\u201cMusk\u2019s decision to suspend accepting Bitcoin as payment over environmental, social and corporate governance (ESG) concerns allowed him and other crypto supporters to control the story and timeline on transitioning miners into using renewable sources.\u201d<\/p><\/blockquote>\n<p>Dorman agreed that Musk raised an ecological flag of sorts. \u201cElon Musk\u2019s erratic tweets have brought ESG to center stage, and this will likely give pause to corporates\/institutional capital,\u201d he <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ar.ca\/blog\/crypto-market-recap-05-24-21\">wrote<\/a> in a blog post.<\/p>\n<p>Will institutional investors, which are more sensitive to ESG issues these days generally, shy away from BTC now for environmental reasons? On May 21, it was reported that Greenpeace would no longer accept Bitcoin donations for environmental reasons, for example. <\/p>\n<p>Furthermore, BTC mining does<em> <\/em>use prodigious amounts of electricity, after all \u2014 much more than the whole country of Argentina in a single year, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bbc.com\/news\/technology-56012952\">according<\/a> to a recent Cambridge University study. \u201cThe pressure is on for Bitcoin and other cryptos to embrace renewable energy,\u201d continued Moya, adding: <\/p>\n<blockquote><p>\u201cBitcoin will eventually appease ESG investors, but for now, all they need to do is keep the big financial institutions happy [by saying] that they are working on it. Ethereum is already ahead of the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a>, so alternative investments will be available for ESG investors. Bitcoin can still succeed without getting ESG support in the short term.\u201d <\/p><\/blockquote>\n<p>What about reports that institutional investors were dumping Bitcoin in favor of gold? Moya agreed that gold has become more attractive and may outperform BTC in the short term:\u00a0\u201cBitcoin has dominated Wall Street as the best performing asset over all of 2020 and the first four months of this year. Institutions that were contemplating Bitcoin but failed to pull the trigger are completely riding the rally in gold prices.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Was_the_correction_overdue\"><\/span>Was the correction overdue?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>It\u2019s important not to let May\u2019s downslide obscure crypto\u2019s overall performance. It has been an extraordinary year, generally speaking. \u201cIf we take a look at the bigger picture, Bitcoin has been climbing for the past seven months and was due for a correction,\u201d said Ong. <\/p>\n<p>\u201cWhen you couple that with overleveraged traders, the 50% dip was essential in order to flush out leverage and ensure the bull market\u2019s momentum can continue.\u201d Meanwhile, Hougan noted: \u201cEven after the pullback, Bitcoin is up more than 300% over the past year. The S&amp;P 500 is lucky if it does that in a decade.\u201d<\/p>\n<p>What impact, if any, will the \u201creset\u201d have on institutional adoption of cryptocurrencies and blockchain adoption moving forward \u2014 e.g., in 2021?<\/p>\n<p>\u201cZero,\u201d answered Dorman, adding: \u201cInstitutional money doesn\u2019t come faster or slower based on price moves. Those trying to deploy will still deploy, and they are. The recent declines in GBTC and COIN may have been leading indicators that this new money was slowing already, but not because of the recent downward price moves.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_blue_ribbon_for_DeFi\"><\/span>A blue ribbon for DeFi?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Overall, The pullback may have boosted interest in decentralized finance assets, Hougan told Cointelegraph. \u201cThis was a severe stress test for DeFi, and the industry passed with flying colors. That should raise confidence in the space.\u201d Dorman agreed that DeFi passed \u201ca major stress test,\u201d <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ar.ca\/blog\/crypto-market-recap-05-24-21\">writing<\/a> in his blog that \u201cit worked exactly as designed, handling all-time-high volumes and record liquidations without even a hiccup.\u201d<\/p>\n<p>Meanwhile, Gradwell told Cointelegraph: \u201cThere is clearly an opportunity for Ethereum to gain ground on Bitcoin if it can deliver on being greener and more useful than Bitcoin \u2014 for example, by moving to proof-of-stake and further innovating in DeFi and NFTs [nonfungible tokens].\u201d Moya, for his part, said that \u201cBitcoin and Ethereum will remain the two favorite holdings for many institutions, though the upside potential appears greater for the latter.\u201d<\/p>\n<p>Is a boost for altcoins relative to BTC, then? \u201cIt ultimately boils down to different institutional interests,\u201d said Ong. \u201cWhile BTC continues to develop its narrative as a hedge against inflation and an appreciating store of value, ETH and DeFi, by extension, will attract stock-like investors.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"%E2%80%9CMaking_a_generational_bet%E2%80%9D\"><\/span>\u201cMaking a generational bet\u201d<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Can one speak of any lessons learned from the recent market shudder?<\/p>\n<p>\u201cFor investors who have not experienced a crypto bear market in the past, this was a great test,\u201d Hougan said. \u201cIf the pullback was too stressful, you have too much of your portfolio invested in crypto. You should downsize your position.\u201d<\/p>\n<p>\u201cThe latest crypto plunge shows that cryptocurrency volatility can be tolerated by both retail and institutional investors,\u201d added Moya. Traders seemed like they were gung ho to buy more Bitcoin even \u201cif the plunge continued all the way towards the $20,000-to-$25,000 zone.\u201d<\/p>\n<p><strong><em>Related: Inflation winds stiffen as Bitcoin ballast on balance sheets proves its value<\/em><\/strong><\/p>\n<p>\u201cPeople will be more careful, especially those with overleveraged positions,\u201d predicted Ong. \u201cFor newcomers, it was an eye-opener as to the extreme level of volatility that you can only find in the crypto markets.\u201d<\/p>\n<p>All in all, the recent volatility shouldn\u2019t deter institutional adoption of cryptocurrencies. \u201cThe institutional investors I speak with are looking at crypto as a 10-year position with significant upside potential,\u201d Hougan told Cointelegraph. \u201cThey know it is a volatile asset. They\u2019re making a generational bet and are not deterred by a few weeks of volatility.\u201d<\/p>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/for-the-long-haul-when-bitcoin-nosedived-institutions-held-fast\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# For the long haul? When Bitcoin nosedived, institutions held fast &#8221; Mid-May\u2019s price plunge was one of crypto\u2019s wildest pullbacks in recent years, a tumble that eliminated nearly $1 trillion from crypto\u2019s market value.\u00a0 The industry had soared to new heights a month earlier, with Bitcoin (BTC) reaching almost $64,000, driven in good part&#8230;<\/p>\n","protected":false},"author":1,"featured_media":261620,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDUvZTJjNGI4NjQtOTI2MC00ODhiLWJiM2ItNTQyM2NmZWQxNzU2LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,117,71835,70551,73711],"class_list":["post-261619","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-business","tag-gold","tag-inflation","tag-investments"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/261619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=261619"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/261619\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/261620"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=261619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=261619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=261619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}