Does Old Money Hold Crypto Hostage?

28 Feb 2020 by rate3

The sign of the new age in investments is that most of us have been so emotionally attached to our hodlings that publicly reviewing any other long-term scenario than laughably bullish or outrageously bearish has become "non comme il fau". iMHO, we've just became addicted to an emotional roller-coaster as any other gambler from the Las Vegas Boulevard.

At the same time, since 2017 cryptocurrencies market has consistently disappointed both rivaling parties by not "going-to-the-moon" or "to zero" but, roughly speaking, oscillating between $200 - $300 bln in its total cap.

Here's a very simplified version of why it might be the long-term trend - and not the "bottom" or the "bounce", as many keep thinking.

Roughly speaking through all major tokens / coins about 70-80% of its ownership are concentrated on several thousands accounts belonging to those who we all call "wales".

We can't be 100% certain, of-course, who or what they are but it's not a rocket science after all and we can presume that they, roughly speaking, can be divided to three categories: early BTC purchasers / investors, prime coins issuers / miners and institutional investors / funds.

Now, what unites all of them is, of course, the fact that their large wealth ($160 - $240 bln) is mostly "unrealized" and shall be converted to the fiat in order to be "materialized" in the forms of Beverly Hills mansions, ocean yachts and family endowments.

Certainly, calling those coins / tokens hodlers the "old money" would be an over-stretch but it might reminds us that many (if not most) of those "wales" (specially those belonging to the first two categories - early adapters and big miners / issuers) are already in their 40th, sometimes, 50th and we all know that caution and risk aversion come with age.

How stupid it's to suppose that most of them now looking not for "mooning" but for "cautious" (in order to not drop the market) exit?

The simplest strategy in this case is to use macro factors to encourage (and, time to time, to "manage") public bullish sentiments trying to sell into the up-trend without "moving the needle" (f.e. through OTC) as long as possible. The downside of this strategy, of course, is the necessity to play "market-makers" when all graphs are going south.

The question is how much of old money has already left the market in the passed 2 years replaced by the "fresh blood" (institutional investors and millenials / genz retail buyers)?

Very basically and approximately we have already had two major upticks (spring 2019 and, arguably, winter 2020) during which market cap increased roughly by $100 and by $50 bln on average. So, in total, we can assume that $150 bln has already fled the market (from which about $80 bln or 2/3 of 80% are, presumably, old-money).

Now, how much of old-money still serves as a glass-ceiling preventing our market to rise? Another $80 bln I would say (with the market cap of about $240 bln).

So, what it takes to buy it out? It's either 800 million of new small holders (with an average trade size of $100) or 8000 medium-size funds' "entries" (by $10 mio each). Therefore, assuming we have 500 crypto-funds executing 5-8 transactions a year on average, it might take another 2 - 3 years for this ceiling to be breached.

Of course it doesn't take into account many factors, including, how many new coins/ tokens are issued and what is the conversion rate of "fresh-blood" into frightened "old-money" (specially considering an increasingly aggressive legislative pressure on crypto).

Well, after all, this article can't take longer that 3-5 min from you to read, right? :)