The Reason of Bitcoin Price Could Take a Very Long Time to Reach All-Time High Again

Throughout the past eleven months, the Bitcoin value has dropped from $19,500 to $3,000, by nearly 85 %.

The dominant cryptocurrency fell by 85 % on the average in its four past major corrections, therefore an identical drop from its all-time high was expected by several investors.

But  according to Bitcoin and technology researcher Boris Hristov, this bear market may potentially last significantly longer than previous corrections.

All Depends on Institutional Investors

The vast majority of investors in the cryptocurrency market are seemingly to have heard of the narrative that institutional investors will come in to bring a lot of worth to major digital assets like Bitcoin because the narrative has been inaccurately pushed since early 2017.

Retail investors or individual traders who lost out massively in the cryptocurrency market crash earlier this year aren't expected to return back within the foreseeable future. Not only have they lost out financially, but psychologically, it discovered as an enormous shock, particularly for newcomers.

If institutional investors are the group of investors that could potentially lead the following mid-term rally of Bitcoin, Hristov expressed that only a restricted range of institutional investors have the means to invest in a market like crypto.

The researcher explained:

“Potential candidates are macro funds, CTAs, alternative strategies and multi strategy funds which have a combined $600bn AuM. Separately, commodity assets held by all HFs in 2017 were $300bn — ca. 10% of AuM. BTC could initially fall in this bucket.”

Institutional investors, under normal circumstances, would invest in a exceedingly|in a very} high-risk asset category through a strictly regulated custodian or an over-the-counter (OTC) market. Coinbase Custody, BitGo Custody, and Fidelity Digital Assets are among the few that are strengthening the infrastructure around Bitcoin.

The involvement of major financial institutions in the likes of Fidelity and Goldman Sachs have led to some enhancements in the institutional sector of Bitcoin. However, considering that over $50 billion might be required to fuel a rally for BTC from a low price range to the $20,000 region and therefore the fact that BTC recovers at a slower rate every time a serious correction happens, a extended recovery period than several investors expect could take place.

"True, BTC has endured multiple 80%+ corrections and recovered massively after that, which is impressive. There's a decent chance it'll do the identical this time as well. But. It gets tougher and harder with each new correction,” Hristov said, adding that institutional investors might fuel a large rally, however it's not sufficient.

"Could these investors put $50bn in the market. Maybe. but it may not be enough though to travel to a new high.”

The problem is that despite the involvement of Fidelity, these custodians and OTC markets are relatively new and they don't have an extended track record. One variable is that institutions may even see a long-term opportunity given the plunge in worth that Bitcoin recorded over the past year.

Infrastructure has to Strengthen

Institutions  as retail investors did in 2017, may suddenly initiate a FOMO (fear of missing out)-like trend in the months to come. But, the asset class has already matured to a specific extent, and as time passes, the chance of an unforeseen huge surge in price may gradually decline.

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