CryptoAM: Institutions call a Bottom, Yale goes Crypto, and Blackberry goes Blockchain

Friday, October 5th

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3 things you need to know:

One: A Fundstrat survey shows that a majority of institutions believe that bitcoin has already bottomed out

A survey of 25 institutional investors showed that 54% respondents believed that bitcoin has bottomed out and and are optimistic about future price action; however, respondents to the firms public twitter poll (9500) are less optimistic, with 66% stating that BTC will drop even further than its current levels.

  • This survey comes in the wake of a Bloomberg report showing that the majority of $100,000+ OTC crypto transactions are now carried out by institutional players rather than retail investors. Institutional interest in the space is increasing, and with the financial infrastructure continuing to evolve, I don’t see them sitting on the sidelines for much longer.

“Big names” such as Tom Lee and Mike Novogratz have recently made predictions for BTC:

  • Lee believes that BTC will trade between $22-25k by the end of 2018

  • Novogratz doesn’t think BTC will even break $9k by the end of the year

The most interesting part of this survey is the spread between bearish retail traders and bullish institutions. The bear market seems to have taken it’s toll on retail traders far more than institutional investors — which would make sense. Retail traders are far more emotional…

Go deeper: Explore the full survey

Two: Yale is the newest investor in Paradigm, a $400mm crypto fund

The Yale endowment announced an investment in Paradigm, a crypto fund founded by Fred Ehrsam (Coinbase co-founder) and Matt Huang (Sequoia Capital partner).

Yale boasts the second largest endowment in the nation at ~$30bn and is among the first large institutions to deploy capital into the crypto sphere.

This is a promising event, as Yale’s investment illustrates the rising interest in the digital asset space from big, institutional money

  • Yale’s endowment is a market leader and has been known to make unique, alternative investments (i.e. VC, hedge funds, PE). Other endowments are likely to follow, as Yale often leads in alternative investments.

  • 96+% of institutions do not invest in cryptocurrencies, but Yale is one of the 4%. We are likely to see growth in this percentage, as new custodial solutions and market infrastructure is developed

According to CNBC, the Yale endowment manager David Swensen is a larger than life figure in the money management world:

Swensen is widely considered one of the world's top money managers. His approach to institutional investing has been outlined in multiple books and has largely reshaped the way other large endowments are managed.

Swensen started at Yale in 1985 when the endowment managed just over $1 billion, according to its alumni magazine, which has also called him Yale's "in-house Warren Buffett."

Three: BlackBerry announced plans to release a new blockchain platform to store and share medical data.

A fun story: BlackBerry is attempting to be relevant again by using it’s carrier grade network operation center to power the digital ledger that will be developed by ONEBIO, a leading biotech incubator, for the purpose of “securely storing data from patients, labs, and monitors.”

Other traditional smartphone developers are exploring the blockchain space:

  • Nokia recently partnered with Streamr and OSIsoft to create a platform to allow users to buy and sell streams of data

  • HTC is aiming at integrating private key storage into its Exodus smartphone

Also in the news:

Market Outlook:

Quick Take

Direction: We are still trading within within a right range. The first range to full break will likely dictate the next 10%+ move, so I’m watching closely here. Over the last few months, it’s been more likely to experience a breakdown after sideways trading.

The bull case has to do with volatility — Bitcoin is currently experiencing the lowest volatility it’s experienced in years. This may entice investors into the market who would normally be scared by sky high BTC volatility.

Key Support:  6560, 6500, 6480

Key Resistance: 6600, 6640, 6700

Actions: I’m still bearish, and expecting a breakdown. I would flip my thesis on a break of 6700, and go long.

Fear & Greed

Here’s a reminder of what these criteria mean

CoinSavage: Truth in Crypto

There’s a big problem with crypto trading. Too many fraudulent actors. People actually take trade signals from random people in twitter— with no way to vet anything.

CoinSavage is the platform to change all of that. They have built a fantastic (and free) platform where all portfolios, trades, and ideas are open sourced and timestamped. No more hindsight TA, now you can actually see for yourself if people are performing, and prove to your audience you know what you’re talking about.

Around the corner:

What I’m thinking today:

The Myth of The Infrastructure Phase

We are currently witnessing a lack of mainstream applications in the blockchain space, which many people ascribe to a dearth of infrastructure. “If we build it, the apps will come” they say, getting more and more desperate.

USV takes the opposite approach to this problem, postulating that it is apps that drive infrastructure — not infrastructure that drives applications.

A common narrative in the Web 3.0 community is that we are in an infrastructure phase and the right thing to be working on right now is building out that infrastructure: better base chains, better interchain interoperability, better clients, wallets and browsers. The rationale is: first we need tools that make it easy to build and use apps that run on blockchains, and once we have those tools, then we can get started building those apps.

Our hypothesis is that this is not actually how things play out. We are not in an infrastructure phase, but rather in another turn of the apps-infrastructure cycle. And in fact, the history of new technologies shows that apps beget infrastructure, not the other way around. It’s not that first we build all the infrastructure, and once we have the infrastructure we need, we begin to build apps. It’s exactly the opposite.

They point towards the history of application development, in which infrastructure has generally followed the needs of applications.

So, what does this mean for the cryptocurrency space as a whole? Watch out for the infrastructure plays. Everyone is getting pretty worried about the lack of DApp usage, without realizing that it may be because the infrastructure is flawed right now.

As we move forward, expect the people building the blocks to learn from the needs and failures of applications to create the environment for a successful layer of blockchain applications.

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CryptoAM is a Ledger Group project. We offer consultancy, advisory and research services for established companies and start-ups interested in the blockchain & digital asset space.