Bitcoin Enters Macro Asset Territory, Institutions Dominate Market
The crypto market has undergone significant changes over the past few years, moving from being driven by industry-specific factors to being influenced by global financial markets.
According to André Dragosch, Bitwise Head of Research, Europe, Bitcoin has become a macro asset, with its price affected by global money supply, real interest rates, and central bank policy. This shift is evident in the increased correlation between Bitcoin's price and equities, as well as the worsening financial conditions due to expectations of tighter monetary policy.
The rise of institutional investors has also changed the dynamics of the market. Institutional players are now accessing digital assets through ETFs and ETPs, leading to a more significant role for capital flows, positioning, and sentiment indicators in determining Bitcoin's price.
Dragosch notes that retail investors tend to be unhedged and focus on upside potential, whereas institutions are more likely to hedge and rebalance their positions systematically. This difference is particularly noticeable during sharp market moves, with retail investors buying after prices rise and selling during declines, while institutions do the opposite.