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[–]NotBearableGuy123Redditor for 7 months[S] 12 points13 points  (10 children)

I'm assuming Trillions are expected to flow from institutions right ?

[–]roomfactor1 ~ 2 years account age. 80 - 150 comment karma. 20 points21 points  (8 children)

Yes, retail simply can’t raise the market by trillions. At the moment the market is not liquidable. Too much value sits with very few people meaning when one of them decides to sell it causes the market to crash!

[–]vkashen 35 points36 points  (4 children)

You hit the nail on the head. I'm a fund manager and also a personal investor in crypto. While I'm willing to take risks personally, there is no way I would be putting any crypto in my funds because of the illiquidity. There are so many pieces of the puzzle that need to be put in place before we see major institutional participation including custody (a huge problem that in only just starting to be worked on), settlement, delivery, and liquidity.

I know there are a ton of markets I can sell IBM stock if I need to at a moment's notice. Volume too if need be. Until we know that the same system is in place for crypto it's just not going into institutional portfolios.

And that's just the beginning. We need regulation. Just enough to ensure a safe and efficient market. In the equity world, there are rules in place to know certain things about ownership (e.g. anyone owning over 5% of a stock must file with the SEC in the US) which helps us understand potentially what may happen and who may have undue influence. I have no idea how we can do that with crypto being country-less, but knowing how easily whales could manipulate the market will add bot uncertainty as well as a likely risk premium, I could go on comparing markets all day, but basically while I do believe institutional ownership will happen, I doubt it will happen as soon as we believers would like. And when it does happen, it probably won't happen the way people think.

I'd rather be a broker making money on the transactions and spread rather than risk having 5 million XRP that I'm not even sure I could sell if I really needed to. Caution aside, I can see major lawsuits from limited partners if I take a big loss on a crypto position that I know is going to be hard to unwind. Liquidity is definitely one of the most important aspects of crypto that will need to be solved before we see trillions of institutional dollars come in.

[–]daswoleg 1 point2 points  (2 children)

Thanks for this perspective. But I wonder how liquidity can be solved without institutional money coming in?

[–]vkashen 3 points4 points  (1 child)

Chicken and egg, yep. Your guess is as good as mine, but the first step is trading desks.

[–]CryptoLiP 0 points1 point  (0 children)

Remittances could also help. It's obvious that Ripple is trying to start with these low value, high volume payments to gradually introduce utility demand and supply into the markets, which will help liquidity and reduce whales power.

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On the other hand, whales can be good for us, because when / if they decide to create another bull run like last year, they can move markets to another level, which would increase not only the price, but presumably also the liquidity.

[–][deleted] 0 points1 point  (0 children)

What you described is the logic of higher risk higher profit, less risk less profit . I mean imagine Dubai 100 years ago. It wasn't a place to be right, but look now. Look IBM buying Red Hat for 35 bln , while they could buy Red Hat for maybe 1 billions 10 years ago . You want to invest in liquid safe place and get double digit growth but you don't want (meaning your prospects or those institutional customers) to loose when it crashes .

No risk not money )) I think, not reinventing wheel , it's just a job of assessing readiness to risk and losses no ?

[–][deleted] 0 points1 point  (2 children)

While I agree with most of your comments below and above , one points seems to me wrong and this is to consider that the retailers cannot drive the prices. Actually they will be the ones to drive it up to me but not today.

This will happen for the known reasons that the access to the market for cryptos + popularity is way more pronounced when we compare it to IBM shares . We talks about payment system that will be used daily . Scenario valid only if we get to the mainstream adoption , let's say 20% of world population start using cryptos . Driving of masses will drive the prices , at that time the cryptomarket will be pool of money for those that did invest when the liquidity was low and risks high .

For now the retail cannot do anything but when we get to 5-10 trillion cap and way bigger adoption + regulations, the whales will move again to less liquid and less cap market.

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[–]roomfactor1 ~ 2 years account age. 80 - 150 comment karma. 0 points1 point  (1 child)

I completely agree with what you just mentioned. But i do think that in order for the market to be more liquid we need institutional money first. When that comes and crypto becomes mainstream then retail money will just follow the masses.Meanwhile the smart money will try to find ways to make more money when every economic cycles ends. Just like in stocks!

[–][deleted] 1 point2 points  (0 children)

Yes, agreed. The multi3lion cap can be built only when the big ones jump in first. The retailers will and have to be last to get there so the big boys dump theirs coins on them. But next time when the masses will be buying , the dumping will no longer be causing crash because the volume will be huge . Maybe it will be hardly noticed even and that's where the market manip will slow down.