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US$100,000. Holy moly. When I first heard that from one of my friends talking about Bitcoin prices projection (according to his ‘professional experience’), I took a deep breath. After all, Bitcoin prices were at their low of US$15,000.

My reply? “Unless Elon Musk says something about crypto again, I don’t see it going to that”

Now, Bitcoin prices are at US$70,000. Who’s the fool now?

I am not an expert in the cryptocurrency markets. I don’t know much about it but I suspect neither do most of the investors in the market. I once asked my friend what is his investment thesis.

“Because I feel like it”

I laughed. But he was right. Sometimes, getting a feel for investor sentiments and the ‘market feel’ is much more accurate than what hardcore research suggests.

In economics, we call this the consumer and business expectations. It doesn’t matter how good your research is, the market will tell you whether you are right or wrong.

And for the case of the Bitcoin and Ethereum markets, I think this is the case. No matter how much I read up on crypto markets, there are just so many ‘random’ elements to them.

Maybe I am going about this wrong.

Maybe I am using the lens of an ‘economist’ and ‘investment analyst’ to look at markets that don’t necessarily need these analyses.

I am looking for the ‘fundamental drivers’ of these markets. In commodity markets, there is always a demand and supply that determines the market price and how much should be produced.

Applying this to crypto markets, what is demand then? Bitcoin is used to verify transactions in ledgers. Banks do this too but in their own systems. Bitcoin decentralizes this for everyone. So, more transactions between users equals more demand.

Supply? There are only 21 million in the system. Only 21 million can be created. Once it reaches this limit, no more will be issued.

On a simple level, this is how Bitcoin works.

But it isn’t

Time and time again, I look at the Bitcoin market and think, “I should probably throw everything I have learned out of the window”.

The dynamics of the market resemble one that is random. Most of the trends are through ‘hunches’ and ‘investor feelings’.

And boy, did I see many Crypto gurus peddling their investment thesis, which if we take a step back, resembles advice from my 3-year-old niece on why she thinks some toys are more valuable.

But strangely enough, it works. Investors follow their advice. The amount of ‘private crypto groups’ taking positions in the markets is huge.

The crypto market resembles a mafia-like one. Top mafia groups issue a directive and their henchman pours in the money also.

And the Top Mafia Groups are Big Institutional Players Now

The approval of Exchange-Traded Funds (ETF) on Bitcoin and Cryptocurrencies was big. The big boys such as BlackRock, Grayscale, iShares, and Invesco have now entered the market.

And everyone is listening.

Since their approval in January, Bitcoin prices have risen by 65%. Meanwhile, Ethereum prices went up by 58%.

It’s like a rubber-stamp moment. Cryptocurrencies have finally entered the exclusive investment circles of the big boys.

No more shall Elon Musk impact the market. Now, it’s the big boys of finance.

Whatever they say, investors will closely follow. And I am not sure whether that’s for better or worse. It will be the same problem that we have for stock markets.

The Narrative will be Driven by the Big Boys Now

Narrative, narrative, narrative.

Remember when I talked about how the market will determine whether you are right or wrong?

I was lying. The big institutional players will determine that now in the crypto markets. I am of the opinion that the big ETF boys will try to ‘tame’ the wild west market that is cryptocurrency.

Just like they did in the stock and commodity markets.

We have all read the investment reports. And we have all followed their advice. When we don’t, there is a high chance that others will.

What can we do then?

I am not an expert in cryptocurrency markets yet. But I study them every week.

I believe in education, and doing my own research. We need to equip ourselves with the knowledge to interpret what the prevailing narrative in the market is.

And sort out the bullshit some of the big boys are spewing for their gains.

As the British saying goes, don’t let them pull the wool over our eyes.

Instead, when they pull it, we grab their hands and take it from them.