Crypto mortality and the rise of the industry immortals
I think that we are seeing what the difference is between personal and institutional investors this bullrun and I believe that those who are treating the current conditions as if it is late 2017, are going to get caught out. Maybe it is because normal people think that what is happening now is financially significant and the numbers involved are very large, while the institutions know well enough that they aren't.
A few days ago the crypto familiars celebrated the crossing of a trillion dollars in total market cap, which is a milestone for sure considering it was only a little over a decade ago that the market cap was a joke, quite literally. But, while a trillion dollars sounds like a large amount, it really isn't at all, especially in terms of a global collective of investment companies each putting a fraction of the funds they control into Bitcoin.
We are seeing this now, where the dumps are being bought up very, very fast and then new highs are being seen just after. It is like, while the holders out there become sellers, the buyers want to make sure that they will never become holders again, at least without making a loss on the trade to get back in.
Bit by bit, the old guard is getting replaced by the new, because while the holders have always talked of 100K and million dollar bitcoin, they are also affected by the uncertainty of it, so take profits 20x lower than that. The old holders are of course going to be fine considering that they have been buying Bitcoin since it was in the 10 or 100s of dollars a piece.
For example, on Binance alone in the BTC/USDT pair, that last 15 minute candle saw almost 7000 Bitcoin change hands, which might not seem like much, but it was 250M dollars worth. The green candle next to it was about 6500 Bitcoin worth and with a slightly higher average buy, it was 240M worth. Half a billion of trade in 30 minutes on one exchange in one market pair - CZ must be loving the trading fee revenue. But, it goes to show how fast 250M can be absorbed and it has already pulled back over half of the last 10 hours of losses in the last 30 minutes.
Did you sell? Did you get your buy back in? I wonder how many missed out, and then chased it back up for a loss, because if it can recover from that dip so fast for that kind of value, how long will it be before it is at 50k?
I wonder, are the institutions going to do what the crypto people said they were going to do, but most aren't? Do the institutions now value Bitcoin more than fiat to a greater degree than crypto people?
It seems that while a lot of crypto people are looking for profits to stack into fiat, the new buyers are looking to grow their Bitcoin stack instead. They don't care about fiat, they just want to shake as many holder coins loose as cheaply as they can. The more they do this, the higher the floor gets and those who were holders are pushed out, while the hype becomes very real through "institutional social proofing", meaning that more and more of the traditional investment firms and corporations will want to jump on the bandwagon and stack on the value.
With so much value looking for a home to increase profits, the potential for crypto to go absolutely insane is very high and the investors know it, which is why they don't mind sucking up the dips at these prices, while a lot of the "crypto traditionalists" think the price is high. Do you buy 50 thousand dollar Bitcoin if you think that people will stack in on top and push it to 100 thousand? 200% on billion dollar investments is significant gains.
Do you remember when MicroStrategy did this:
the largest independent publicly-traded business intelligence company, today announced that it has purchased 21,454 bitcoins at an aggregate purchase price of $250 million, inclusive of fees and expenses.
That was in August 2020.
$793 798 000
is about what it is worth at this moment.
Effectively, the dump an hour ago could have been them and it would have covered their initial 250M investment and would still leave them 15000+ Bitcoin worth half a billion dollars. That is over half a billion dollars of profits in five months. If it was them who sold, selling the next 5000 at 100K per coin will give them another half billion and they will still have half their initial stack.
They bought those 21K Bitcoin from someone and that someone made a handsome profit I am sure - but, they also sold all of those coins for a third of the price they could get for them now - leaving them half a billion dollars less value. They probably aren't on the breadline yet...
But, this is the thing with it. Individuals are affected by their needs, desires, expectations and their personal evaluations of what is enough gain. This means that individuals will sell in order to satisfy themselves, even though the industry is still in its infancy.
The institutions however, are looking long on gains, as they are investing for people's retirements and the like plus, being a corporation, they don't have feelings, they don't care about beach holidays and they know, they aren't going to die. They can have what would be considered a highly focused financial model to generate generational wealth, but don't need to have a family. The CEOs can change yearly and the staff can all be fired and replaced by AIs, and the company doesn't care as it is soulless and the investors don't care, as long as profits are being made. Not only that, they don't have to worry about ungrateful descendants spending all of the "hard work" because the corporation will always be a corporation - profit focused.
As individuals, we are very shortsighted because we have to be, as our time on this earth is finite. It doesn't matter if it would be more beneficial to hold for a decade more, our biological clock is saying, take profits and have some fun now. We don't really care if selling to a corporation or bank is the antithesis of what crypto was meant to be, as long as we as individuals are rich and can have what we want, the industry itself and all the people who were hoping it to be a savior for their well-being, can go to hell.
And this is what the institutions not only see, they know. This isn't their first rodeo and while it seems to us that they are paying a high price to get into the market compared to a year, two or 5 ago, they don't care at all, if they are going to end up owning the market itself. If you could go back in time to the founding, how much would you be willing to pay for a 25% share in Apple, knowing the current evaluation?
They say that the best way to predict the future is to create it and I think that the financial institutions believe they can do just that, create the future by shaking large volumes of coins loose cheap, while those they buy it from are believe they are selling high. It is a perception difference, where the perspective a normal person has on the value of something is skewed by proximity and attachment to life, while the large organizations have distance and disconnection.
We are mere mortals. The corporations do not die. Even when they fail, their value is sucked up by other lifeless corporations, if there is a profit to be made in doing so. It is why these dips are being absorbed so fast at this point, because those buying believe that they know that the future price is going to be worth it and because they have very deep pockets, they will be able to shake coins loose from those who think the price is high. This means that once they hold enough, there is little chance of a big dump and if it comes, they can protect the floor as a collective of invested organization, keeping those they bought from, from ever getting back in.
Of course, markets are speculative and run on sentiment. When we as individuals speculate based on our sentimental views of the world, we are affected by our position and subsequent perspective. A trillion is a lot of money for an individual. Not very much for an industry. The largest industry in the world is finance and they seem to think there are profits to be made.
Taraz [ Gen1: Hive ]
Posted Using LeoFinance Beta
