It is no secret that institutional money is behind some of Bitcoin’s most talked-about moves, a 99Bitcoins expert will tell you. While the latest wave of ETFs has added fuel to the fire, there is a flip side: the way these big players trade is adding to the market’s jitters.
Emotional Dynamics of New Institutional Investors
The expert at 99Bitcoins attributes this to the sheer volume of capital coming in via new ETF and trust products. It has been a good thing for Bitcoin, but it also means dealing with investors who are prone to emotion. You see it in the numbers: a fast inflow can be just as quickly reversed by an outflow, and before you know it, the price has taken a sharp turn.
In the end, this kind of reactivity is what is dictating price action. With so much on the line, any change in sentiment or a piece of news can send ripples through the market as large positions are moved in an instant.
The Role of ETFs and Trust Funds in Bitcoin’s Price Surge
You can attribute much of the present upswing to the influx of new ETFs and trust funds. They are channeling millions into Bitcoin and, in doing so, have made it much more accessible for sizable investors to get in on the action. That kind of demand is what is pushing prices up. 99Bitcoins is right when they say there is a dual effect: on one hand you have the capital and the adoption; on the other, the short-term nature of some of these players introduces a good deal of volatility.
Then again, as some will tell you, the jitters from the latest swings don’t change the fact that the outlook is still up and to the right. With more of these products being launched, we should see institutions come in even stronger. In time, as they get used to the way crypto works, that is likely to have a steadying influence on the market.
Volatility and Long-Term Outlook for Bitcoin
A 99Bitcoins specialist has issued a word of warning: be ready for some turbulence in the Bitcoin market. When institutions act on emotion, it can set off an unanticipated up or down move, so the near term is hard to call. Then again, if one looks at the numbers, there is a pattern: once outflows run their course, capital has a habit of reappearing and those who have the patience to wait are usually the ones to see the returns.
There is a general sense of confidence in where Bitcoin is headed. Volatility will be with us, but the consensus is that we will see more of that institutional backing, which could well be what propels the asset to new peaks. The best course of action is to keep an eye on things and be clear on the risks when the market gets worked up.
Source — 99Bitcoins: https://www.youtube.com/watch?v=l_YJeZ074Xo