Smart people invest in cryptocurrencies during this time period

1 Institutional investor’s ambition
Garry Tan, co-founder and well-known investor at Initialized Capital, believes that institutional investors are pouring a lot of money into the world of cryptocurrencies, and now may be the best time to get institutional funding.

Garry has invested in cryptocurrency startups such as Coinbase. He pointed out that this year’s cryptocurrency bear market actually reduced the investment risk of new visitors, especially for institutional investors. The amount of funds injected by these institutions in the cryptocurrency economy is basically the same as the amount of funds they invested in core venture capital investments, indicating a higher return expectation.

2 Encryption funds are not performing well
Due to the poor performance of cryptocurrency funds, many high-cost entry investors continue to lose money. In the past few years, many investors have deployed a large number of cryptocurrency hedge funds. Last year, the cryptocurrency market was optimistic and the market was expected to be extremely high. As a result, many hedge fund managers overestimated the growth of cryptocurrency portfolios, using investors’ multi-million dollar assets for cryptocurrency speculation.

In August of this year, Autonomous Next, a cryptocurrency research and financial technology analysis company, released a report showing that in the first half of 2018, the valuation of most cryptocurrency hedge funds fell by more than 50%. The study also believes that a significant portion of hedge funds deliberately shorted Ethereum, which is the main catalyst for poor overall market performance.

According to the report, “To use a project on the Ethereum platform, users have to use third-party tokens with the main goal of fundraising to make purchases and payments. This makes the ETH coin less common and weakens its role. The function of the accounting unit or exchange medium. Moreover, the ICO project party must cash out the raised ETH to maintain the team’s operations, which imposes a constant selling pressure on Ethereum.”

The report also mentions that the lack of regulation and the rejection of Bitcoin ETFs are also important factors for investors to continue to sell cryptocurrency assets during this period.

3 Bear market is bottoming out
Bitcoin experienced a bull market in 2017–2018. At the end of 2017, the total market value of cryptocurrency was as high as $795 billion, which has now shrunk to $218 billion. In less than a year, the market value has evaporated by 72%.

However, many industry experts believe that cryptocurrency is bottoming out. As the leader in the cryptocurrency market, BTC price has gained strong support around $6,000.

In early September, billionaire Mike Novogratz said, “$6,000 is the bottom price of Bitcoin.” ErikVoorhees, founder and CEO of the digital currency trading platform ShapeShift, pointed out that although the bear market is not over yet, investors are coming at this time. It’s completely feasible, because Bitcoin is hard to fall below $6,000.

In fact, many institutional investors have already opened positions at this bottom, because this is obviously much safer than entering at a higher price. This also means that most of the funds will not be out of the $6,000 price range, and other mainstream cryptocurrencies will also form their respective bottom prices. For example, Ethereum, the second-largest market capitalization, has gained strong support around $200. Similarly, XRP, BCH, EOS, XMR and Litecoin all rebounded from their respective annual lows.

Currently, technical indicators show that the overall trend is still empty, and Bitcoin has set the lowest weekly trading volume in the past seven days. However, given the positive developments in the cryptocurrency industry and the stability of bitcoin prices over the past two months, the cryptocurrency market is likely to be bottoming out.

4 Standardization of the encryption market
As most speculators exit the cryptocurrency market, the remaining market participants are increasingly aware of the function of cryptocurrency. As investors become more aware of potential scams, new 1CO projects that lack reliable proof of concept are on the verge of death. As blockchain investment increases, regulators also show greater interest in developing cryptocurrency regulations.

In addition, the famous investment manager David Swensen also believes that the current cryptocurrency market is less risky and has recently invested in two cryptocurrency funds.

For long-term investment-oriented institutional funds, the cryptocurrency winter is giving them the opportunity to invest in the cryptocurrency market at a relatively safe cost. The bear market is not terrible because it also means low cost. The most terrible thing is to grab the bull market tail and enter the market, and then the assets plunged 80%. This kind of deep pit is the most difficult to fill.