Adrian Reid explains that increasing institutional capital (fund managers, hedge funds) entering crypto will change participant behavior from retail, leveraged iPhone traders to professionalized traders. He predicts reduced volatility and fewer extreme price swings as markets become more regulated and trustworthy—more stock-like but not identical. Reid argues this will shrink the opportunity for outsized profits available today to systematic, contrarian strategies, and advises current sidelined investors to enter now and adopt systematic rules before the edge diminishes.
Chapters
There's a couple of things that will undoubtedly change. The first one is more and more institutional money is going to come in, which means very different styles of participants. Right now, a lot of the participants are people on their iPhone with a thousand bucks in their account going, you know, with leverage. And that creates a certain price behavior in the market. But if you bring in institutional fund managers, hedge funds and that sort of thing, with tens of millions or billions under management, they're not trading like that. It's quite different. So what I think will happen is over time, as institutions come in and it becomes more of part of everyday life, the volatility and the frequency of price swings in the market will get muted. It'll, it'll. It'll become more like stocks. Not exactly like stocks, but more in that direction. So I would expect to see the magnitude of these moves drop eventually. But in order for that to happen, it's got to be professionalized a little bit more. Yeah, there's probably going to be more oversight in some form. I don't know what that looks like. But, you know, if you think about the stock market way back, you know, way back when there was a lot more kind of crazy behavior, fraud, sort of listings and dodgy things going on in the brokers and all of that, and then it sort of got regulated away and it became a more stable market and it was more trustworthy. Crypto will go the same way it already is. I mean, I'm much more confident having money in the market on an exchange now than I would have been, you know, five years ago. And what's important to realize then as a result of that is if someone's sitting on the sidelines thinking, oh, yeah, crypto is interesting, but, you know, I'm just going to wait until you're missing a huge opportunity, because right now it is still a bit Wild west ish. And you can profit very, very handsomely with these price moves if you've got a good set of rules. But if you wait five years, the market will have matured and you'll still be able to profit, but you won't have these massive outsized profits that you can get today by standing out from the crowd with a systematic approach. So I'm kicking myself that I didn't get into crypto years earlier. I'm a bit of a slow adopter generally in life. And I would say to someone who's on the sidelines now, don't keep waiting. There's a great opportunity and it's going to gradually disappear as more and more and more institutional money comes in, and it gets more and more regulated and professionalized. So get in, get systematic, make good money. And then over time, that'll just sort of revert to being just another market, just another asset class.
