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Let's dig into the 'institutional flows into Bitcoin' narrative: an article from Kaiko caught my eye earlier (Kaiko say they are 'the leading provider of institutional grade cryptocurrency market data')...
So we all know the story right?
Institutions that Bitcoin was supposed to destroy are now buying Bitcoin and that's fine because 🚀?
Nooo, not that one! This one 👇
From October to December 2020, USD volumes soared as Bitcoin underwent a record-setting bull run driven by institutional traders
None of this means that institutions are suddenly sold on Bitcoin as 'the future'...
In fact, analysts at JPMorgan believe that 'a significant component of last year’s institutional flows into bitcoin reflect speculative investors seeking to front run other more real-money institutional investors,'
When will these real-money institutional investors arrive?
Calm down Gordon... 😐
He might be right though... this is the chart that really caught my eye:
We have an outlier!
Right... What's so special about LMAX?
They're exclusively focused on institutional flow...
Earlier this month, LMAX Chief Exec David Mercer explained:
- LMAX has more than 400 institutional customers
- Approximately 35 banks
- All have become more interested in crypto trading
“Three years ago there was zero interest from the banks in crypto trading and now one third take crypto market data from us,” he added.
“I expect two to three major banks to be trading crypto with us by the end of this year.”
Citi recently published a 100+ page report 'Bitcoin: At The Tipping Point'
The intersection of low yields and inflationary expectations has increasingly fostered the institutional investor view that Bitcoin could represent an inflation hedge, a portfolio diversifier, and a safe haven not currently offered by traditional government bonds all at once.
There are a lot of hurdles to overcome for full institutional adoption...
- Capital Efficiency: Capital would be effectively locked up & there is no unsecured financing available
- Insurance and Custody Concerns: Currently high insurance costs and low coverage
- Security Concerns: Hacks & illicit or illegal activity
- Questions Around Tether: Tether is not fully transparent and does not allow for the audit of its collateral reserve
- ESG Impact: energy required to solve the cryptographic problems as part of Bitcoin mining
None of these are insurmountable...
Is the LMAX trade data evidence of the institutional puzzle starting to fall into place?
It certainly looks that way, and all adds to the feeling that the crypto revolution still has a lot of room to run...
CME Group Launches Micro Bitcoin Futures on May 3
Micro Bitcoin futures will be one-tenth the size of one bitcoin. The smaller-sized contract will provide market participants – from institutions to sophisticated, active, individual traders – with one more tool to hedge their spot bitcoin price risk or execute bitcoin trading strategies in an efficient, cost-effective way, all while retaining the features and benefits of CME Group's standard Bitcoin futures.
Every little helps
🔥 Hot and 🚫 Not
🔥 Viacom lives to fight another day... +3.6% in pre-market...
The Archegos liquidation did some serious damage and the mass media giant shares tumbled by ~55% in a matter of days...
It's been a wild ride, (it even says so in the top left corner of this graphic ⤵)
Analysts were falling over themselves to downgrade the stock when it traded at the highs... , but nothing about the business has materially changed...
The average analyst recommendation sits at $59.50...
Which is more likely from here... A relief rally or more pain ahead?
🚫 Volkswagen becoming Voltswagen... Deadly serious... 👀
VW are renaming their U.S. operations “Voltswagen of America” as part of the shifting focus to electric vehicles... Over to president and CEO, Scott Keogh,
“We might be changing out our K for a T, but what we aren’t changing is this brand’s commitment to making best-in-class vehicles for drivers and people everywhere,”
Jokes aside, the tactic is a good one - investors are believing VW's hype and Tesla is in for some competition in more ways than one...
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