ARE HUGE INSTITUTIONAL BUYS ACTUALLY DRIVING BITCOIN PRICE? OR JUST BS...
Big buyers do OTC- so where's the push going to come from?
I saw this tweet lately from anti-bitcoin cum gold-bug Peter Schiff. Below:
Well, he’s trying to say that these huge institutional buys don’t influence prices since transactions never hit the order book, but rather OTC –over the counter.
OTC - Over the counter (These are direct deals that do not require going through an exchange – transaction happens directly between two parties). Crypto OTC desks deal in thick volumes.
The fact is, Institutions do OTC!
Big buyers do this to avoid slippage. (Slippage: the difference between the price at which you want to buy and the price at which the trade is executed).
If you place huge buy orders on a not-liquid enough exchange, chances are your order will eat up higher sell orders, making you buy at different higher prices than you would have originally loved to.
But what's the point if institutions can buy OTC? How does Bitcoin price get to move from organic institutional demand?
The idea is that at some point institutions will run out of OTC deals if they keep buying. There's not enough bitcoin to go round and there's surely not enough available for those huge OTC deals.
These institutions (big buyers) will be forced to go to exchanges which should eventually cause prices to go higher (at least that’s the idea).
Nevertheless, Bitcoin is currently having a good time, trading above $23,800 after hitting $24,000 for the first time during the weekend.
Since 2017/2018, popular crypto analysts and fund managers have called on institutions to hedge a little percentage of their assets on BTC; right now it’s just about who is next.
The attention from institutions and big hedge funds are surely great fundamentals for bitcoin and the entire crypto industry.
We’ll be seeing a lot of retail crypto FOMO in 2021, hence you should be buying crypto!