Thread by @jameslavish

Why it is taking so long for Institutional Investors to buy $BTC?

Answer: Institutional Alice (IA) must venture down the crypto Rabbit Hole

[🧵👇]

1. IA must understand Cryptos in general

Many are already down this path, but you would be surprised how many are still not

Try to remember how long it took you to understand #Bitcoin at first

2. IA must have a total grasp of #Bitcoin vs other Cryptos/ETH

The uniqueness of $Bitcoin is difficult to get at first, especially for newcomers

Many are still not far enough down this path yet

3. IA must understand #BTC vs Traditional Assets

Valuation Metrics: S2F vs EPS, etc

Risk Analysis: Sharpes and drawdowns

Portfolio dynamics
- Sizing
- Correlations vs other holdings
- How do we price daily? There is no real "close"

4. IA must get buy-in and approval from CIO/Investment Committees

Meetings, meetings, & more...meetings

Fiduciary duty—Alice must believe it's her duty to "own" vs "avoid the risk of" #BTC

Reviews of which funds or accounts is #BTC appropriate for and why

5. IA must review compliance and tax issues

SEC procedures, GAAP accounting, Tax implications, etc.

Offshore vs onshore accounts

ERISA vs High Net Worth vs Pension accounts & structures

6. IA has unique Custody requirements

Unlike individuals, institutions do not hold their own assets, Prime Brokers or banks custody for them

This is happening, but still being built and refined

7. IA must keep it all v. quiet.

Why?

To avoid friction cost of trading:

1 to 3% of a $1B fund = $10M-30M or ~220 to 660 whole BTC to buy

1 to 3% of a $10B fund = $100M-300M or ~2200 to 6600 whole BTC to buy

Alice may also have multiple funds to balance and buy for

This is why they will not announce publicly, they will just reveal in SEC filings.

In short: Be patient, it is coming.