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Over the past eleven months, the price of Bitcoin has dropped from $ 19,500 to $ 3,000, almost 85 percent.
The dominant cryptocurrency has fallen by an average of 85 percent in its four previous major corrections, so a similar decline from its all-time high was expected by many investors.
But, according to the Bitcoin researcher and technology Boris Hristov, this bear market could potentially last much longer than previous corrections.
Everything depends on institutional investors
The vast majority of investors in the cryptocurrency market are likely to have heard about the fact that institutional investors will come to give more value to the main digital resources like Bitcoin because the narrative has been improperly pushed by the beginning of 2017.
Retail investors or individual economic operators who have massively lost cryptomage in the market crash at the start of this year are not expected to resurface in the near future. Not only have they lost financially, but psychologically, it has turned out to be a major shock, especially for newcomers.
If institutional investors are the group of investors that could potentially lead to the next Bitcoin medium-term rally, Hristov said that only a limited range of institutional investors have the means to invest in a market like the crypt.
The researcher explained:
"Potential candidates are macrofondi, CTA, alternative strategies and multi-strategy funds that have a combined $ 600 billion AUS Separately, the commodity holdings held by all HFs in 2017 were $ 300 billion – about 10% of AuM BTC could initially fall into this bucket. "
Institutional investors, under normal circumstances, invest in a high risk asset class through a strictly regulated custody system or an over the counter (OTC) market. Coinbase Custody, BitGo Custody and Fidelity Digital Assets are among the few that are strengthening Bitcoin's infrastructure.
The involvement of major financial institutions such as Fidelity and Goldman Sachs has led to some improvements in the Bitcoin institutional sector. However, considering that over $ 50 billion could be needed to fuel a BTC rally from a low price range to the $ 20,000 region and the fact that BTC recovers at a slower pace every time a major correction occurs, a period of longer recovery than what many investors expect can take place.
"It's true, BTC has undergone more corrections of 80% and has recovered massively after that, which is impressive, but there's a good chance it will do the same this time, but it gets harder and harder with every new correction, "said Hristov, adding that institutional investors could fuel a big rally, but it is not enough.
"These investors could invest $ 50 billion in the market, but it may not be enough to reach a new high."
The problem is that despite Fidelity's involvement, these custodians and OTC markets are relatively new and do not have long experience. One variable is that institutions could see a long-term opportunity given the fall in value recorded by Bitcoin in the last year.
The infrastructure must be strengthened
Institutions, as retail investors did in 2017, could suddenly start a FOMO trend (fear of losing), as in the coming months. But the asset class has already matured to some extent and, over time, the likelihood of an unexpected massive price increase may gradually decline.
Shutterstock foreground image. TradingView Charts.
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