Institutional Investors Flock to Bitcoin Amid Volatility, Despite Short-Term Risks

Vaneck Sees Bitcoin Pullback as Reset Amid Rising Institutional Demand, but Warns of Short-Term Risks

Leading digital asset manager Vaneck has weighed in on the recent pullback in the price of Bitcoin, suggesting that the correction is a necessary reset amid rising institutional demand for the cryptocurrency.

In an interview with CNBC, Vaneck's Director of Research, Mike McGlone, stated that the current market dynamics are reminiscent of 2017, when Bitcoin's price surged to nearly $20,000 before correcting sharply. McGlone believes that the current pullback is a similar "reset" that will ultimately benefit the market in the long run.

"We think this is a reset, not a crash," McGlone said. "The fundamentals are strong, and we think this is just a pause before the next leg up."

Vaneck's bullish outlook is based on the growing interest in Bitcoin from institutional investors, such as pension funds and family offices. McGlone noted that the company has seen a significant increase in inquiries from these types of investors in recent months, citing the cryptocurrency's increasing liquidity and the growing recognition of its potential as a store of value.

However, McGlone also warned of short-term risks, cautioning that the market is still susceptible to volatility and price swings. He noted that the recent pullback has been driven in part by the unwinding of leveraged positions and the liquidation of stop-loss orders, which could lead to further price drops if the market continues to trend downward.

Despite these risks, Vaneck remains optimistic about the long-term prospects for Bitcoin, citing the cryptocurrency's limited supply and growing adoption as key drivers of its value. McGlone predicted that Bitcoin's price will eventually break out of its current trading range and continue to rise, driven by the growing demand from institutional investors and the increasing recognition of its potential as a store of value.

"We think Bitcoin is going to be a trillion-dollar asset in the next few years," McGlone said. "We're just in the early innings of this story."