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Retail investors sell during the big drop, while institutions take advantage to buy? How do professional investors view market crashes?

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Retail investors sell during the big drop, while institutions take advantage to buy? How do professional investors view market crashes?

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Retail Investors Sell Off, Institutions Buy In

According to data fromChainalysis, global investors spent around $410 billion buying Bitcoin during this recent bull market. However, following setbacks from Elon Musk and Chinese policies, Bitcoin and other cryptocurrencies experienced a significant pullback, with approximately $300 billion in losses, the majority of which came from retail investors selling pressure.

Source: Chainalysis

Chainalysis research shows that unlike retail investors, institutional investors seem to be taking advantage of the market crash to buy chips at low prices, thereby laying a foundation in the market. According to Chainalysis research, large investors bought a total of 34,000 Bitcoins on Tuesday and Wednesday.

Source: Chainalysis

What Institutional Investors Say

According to a report by Bloomberg, Felix Dian, founder of MVPQ Capital and former Morgan Stanley trader, stated that the volatility of Bitcoin actually demonstrates the reasons why hedge funds exist in the market:

"Diversifying investments to weather the ups and downs of the cycle so clients aren't wiped out in these extreme market conditions."

MVPQ Capital's $80 million cryptocurrency fund grew by 14% in May, with the fund's net value more than doubling this year. In contrast, Bitcoin plummeted over 30% this month, erasing about 40% of its gains since the beginning of 2021.

During an interview this week, Felix Dian mentioned that they held onto some funds and bought Bitcoin during the crash on Wednesday when the price was around $35,000.

Charles Erith, CEO of ByteTree, who has focused on investing in Asian emerging markets for 24 years, pointed out that the speculative bubble has dissipated this week, and they also bought Bitcoin during the downturn.

"At $35,000, we think this is a reasonable level. It's obviously unregulated, a very young asset, but I don't think we'll see a repeat of 2018."

Kyle Davies, co-founder of Three Arrows Capital in Singapore, believes that those who leveraged their investments have been cleared from the market. With token prices plummeting this week, Three Arrows Capital also bought more Bitcoin and Ethereum.

"Every time we see a massive liquidation, it's an opportunity to buy. I wouldn't be surprised if Bitcoin and Ethereum recover the entire drop within a week."

Loan Venkatapen, founder of Blocklabs Capital Management, also attributed the recent market collapse to over-leveraged retail investors and stated that blockchain and its related technologies will continue to exist regardless of market fluctuations. Unlike the aforementioned institutional investors, Venkatapen did not choose to buy Bitcoin but rather assets related to decentralized finance movements such as Ethereum, Solana, and others. He said:

"Bitcoin is not going away, but we expect blockchain assets with utility like Ethereum or Solana to challenge Bitcoin's dominance in the coming months."

However, it has been noted that Three Arrows Capital transferred a large amount of ETH to exchanges. While institutions naturally express confidence and call out during significant downturns, their actual actions are still worth observing: