Brace yourselves: new institutions are waiting for Bitcoin’s price to calm down
Bitcoin’s volatility is scaring off new institutional investors, but those who have already entered the sector continue to accumulate by taking advantage of contractions
Given the ongoing bullish trend, several institutions from the world of traditional finance have tried to ride the crypto wave. First, the open interest and trading volume of Bitcoin futures has increased significantly over the past few months. While this is a predictable development, another change has Crypto Wealth surprised the crypto industry: the Chicago Mercantile Exchange, a global derivatives exchange, has recently become the world’s largest trading platform for Bitcoin futures.
In this regard, data published by crypto analytics platform Bybt indicates that the CME accounts for $2.4 billion of the $13 billion total open interest in Bitcoin futures, followed closely by cryptocurrency exchange OKEx, with a total of $2.17 billion and ahead of other major names such as Binance, Huobi and Bybit.
It should come as no surprise that, since December last year, Bitcoin’s (BTC) parabolic growth has increasingly attracted the attention of investors around the world. To put things in perspective, despite BTC’s recent correction that took the asset below $32,000, the cryptocurrency has rebounded to well above $38,000, thus posting a net profit of about 95% in 30 days.
Is institutional interest rising or is stagnation approaching?
Recent volatility has created concerns about the sustainability of the current bull market, raising questions about a possible decline in institutional interest in Bitcoin. As Konstantin Anissimov, general manager of UK cryptocurrency exchange CEX.IO, explained to Cointelegraph, it is important for newcomers to realise that the issue is not simply about institutions entering the market, but rather reducing the risks associated with it:
„Unless something really drastic happens to turn the whole market around, and it’s hard for me to imagine something so negative, I think in the future more and more big companies will continue to invest in Bitcoin and other cryptocurrencies.“
Quinten Francois, presenter of the Young and Investing YouTube channel, believes that most of the institutions looking for action have already made their entry, adding that during parabolic phases like these it is hard to imagine more big, wealthy names coming into the sector, at least until the end of the year when things become more stable.
That said, he added that many of the institutions that have invested in the crypto sector are now likely to be accumulating, using the contractions to their advantage. When they reach their desired positions, retail money will slowly pour back into the market, pushing the value of BTC even higher:
„Smart money investors know what they are doing, they will not buy during parabolic movements.“