Institutional Investors were all expected to flock to bitcoin starting in 2018, but it never really materialized...
Why is that?
For much of late 2017, all of 2018, and much of 2019 a lot of the talk has been about institutional investors coming in and taking bitcoin to new highs.
For whatever reason, it hasn't really materialized.
(Source: https://bitcoinist.com/bitcoin-price-22k-end-2018-tom-lee/)
There have been a whole host of reasons thrown out there as to why that is, and perhaps after today we can add a new one to the list...
According to Tom Lee of Fundstrat Global Advisors, he says bitcoin and crypto are still too small for most institutions to get involved.
With the total crypto market cap around $200 billion, it is small potatoes compared to the $8 trillion gold market, the $66 trillion stock market, and the $86 trillion bond market.
According to Lee, that is just too small for many of the big fish:
“There’s a mechanical issue for crypto in terms of infrastructure that’s needed but there’s probably also a size of market issue.”
“If you’re asking someone to allocate 1% to bitcoin — that’s like triple the market weighting, like you’re asking someone to make a massive bet even though it’s 1% of their assets because bitcoin is that small.”
(Source: https://bitcoinist.com/tom-lee-bitcoin-btc-is-still-too-small-for-institutions/)
So, we still have a size issue according to Lee, which ironically is kind of a 'chicken or the egg' sort of thing.
The market needs to be bigger in order to attract the large institutions, but the market likely needs these institutions to invest in order to get bigger.
Which is going to give first?
It's not just the size that's an issue though...
It's how you use it! (just kidding)
There are still major regulatory uncertainties that are overhanging the crypto markets.
We have a lack of clarity from regulators in a number of jurisdictions as to which tokens are or aren't securities, as well as couple other gray areas which is giving investors pause.
We also have a lack of clarity on taxes in many places, or outdated taxes that don't really make sense in the current crypto markets.
Hopefully we can get some clarity on these in the near future as that may help get some of the big boys in, which is likely would we need to push bitcoin to new highs.
Stay informed my friends.
-Doc