New Fundstrat survey reveals retail and institutional investors remain bullish on crypto
On October 4th, noted Cryptocurrency analyst firm Fundstrat published the results of a survey undertaken by the firm to gauge the sentiment of crypto market participants. Fundstrat took a novel approach to their approach, surveying institutional and retail investors separately. The report hopes to glean information about the health of the market by analyzing and comparing the responses given by the two separate groups of participants. (You can download the report using this link.)
Fundstrat was founded in 2014 and is a boutique investment advisory firm. The firm’s managing partner/head of research is Tom Lee, an extremely well-known figure in the crypto markets, who has become famous for his bullish BTC price predictions. Lee spent fourteen years at JP Morgan, ultimately rising to the position of managing director before decamping to Fundstrat.
In an interview on CNBC in late August Lee stuck with a bullish call for BTC, claiming that it is likely that BTC could end the year higher priced higher than $25,000. Lee issued a similarly bullish call for Ethereum on September 27th, saying Ethereum was due for a “major trend reversal.”
The results are interesting, but there are some caveats around how the information was collected. The institutional investor community was asked a series of ten questions, while the retail community was asked six questions.
The surveys were also of vastly different sizes. The institutional survey was done during a dinner for investors, in which twenty-five investors participated. The retail survey was conducted via Twitter, and received an astounding number of responses, approximately 9,500 people participated. Lee discussed the results of the survey on a segment on CNBC on October 4th.
The results highlighted some striking contrasts between the beliefs of the two communities. While both a plurality of institutional and retail investors believe that Bitcoin’s price has already bottomed, a greater percentage of institutions see the price has bottomed compared to retail investors. After adjusting the response to include all possible responses Fundstrat calculates that institutional investors are far more confident that Bitcoin has reached its price floor.
The survey also asked both sets of participants to predict where they saw Bitcoin’s price at the end of 2019. Institutional investors were also surveyed on where they saw Bitcoin’s price at the end of 2018. Comparing the two pools of predictions for the 2019-year end price, the Fundstrat reached the conclusion that institutional investors were significantly more bullish on the long-term price of Bitcoin than the retail community. 57% of institutional investors thought Bitcoin would end above $15,000 by the end of 2019, with only 40% of retail investors making the same prediction.
Retail and institutional investors agreed when asked about the relationship between crypto prices and an economic downturn. 72% of institutional investors surveyed thought crypto prices would rise during a recession, with 59% of retail investors agreeing.
One of the most striking examples of divergence between the two set of responses came when Fundstrat asked each set of participants what the best and worst performing token would be in 2019. Most institutional investors (59%) thought that Bitcoin would be the best performing token in 2019, while a strong plurality of Twitter respondents (44%) believed that XRP would be the best performing token.
The responses to questions that were solely asked to institutional investors provided illuminating insights into how institutions see the challenges facing the broader crypto market. When asked what the impact of the US government’s strict regulatory policy on crypto would ultimately be, sixty percent of institutional participants surveyed thought that the rest of the world would increasingly fall in line behind the US’s relatively strict regulatory stance.
While Lee has stuck to his bullish calls, other prominent prognosticators have recently walked back their predictions. According to CNBC, noted bull Mike Novogratz recently told an audience at a Manhattan event that he did not expect Bitcoin to crack $9,000 by the end of 2018. Novogratz, founder of Galaxy Digital, made a series of extremely bullish price predictions for Bitcoin during the 2017 bull market.
The results of this survey offer insight into how both institutional and retail investors see the crypto market evolving over the upcoming year. The results, however illuminating, must be taken with a grain of salt however.
The conflicting methodologies for taking the surveys, in person versus via Twitter, along with the vastly different sample sizes, are both areas of concern. Additionally, we have no way of knowing the composition of the group of retail traders that participated in this survey. It seems likely that the pool of retail survey participants would have caught its fair share of institutional responses as well.
These caveats aside, the result from Fundstrat’s survey seem extremely bullish for crypto pricing. The crypto community has long been waiting for institutional investors to start to invest heavily in crypto. The results of this survey indicate that may be coming soon.