Why Institutional Investors Are Bearish on Bitcoin

Why Institutional Investors Are Bearish on Bitcoin

The recent price action of Bitcoin has not been impressive, and institutional investors are taking notice. Data shows that institutional investors are feeling bearish about the flagship crypto, leading to massive outflows from Bitcoin investment products. CoinShares reported that Bitcoin investment funds experienced an outflow of $284 million last week, with a significant portion coming from US Spot Bitcoin ETFs – which saw outflows of $156 million. This was a notable event as it was the first time these funds recorded such a substantial amount of outflows.

CoinShares suggests that the magnitude of outflows can be attributed to Bitcoin’s price dropping below $62,000, which is estimated to be the average purchase price of these ETFs since their launch. This decline likely triggered automatic sell orders, causing panic among institutional investors who had shown mixed feelings towards these funds due to Bitcoin’s recent price volatility.

While US Spot Bitcoin ETFs experienced outflows, Spot Bitcoin and Ethereum ETFs in Hong Kong saw a different trend. The newly launched ETFs recorded $307 million in inflows in the first week of trading. This contrast suggests that institutional investors in different regions have varying sentiments towards Bitcoin and other cryptocurrencies.

Interestingly, while Bitcoin recorded outflows, Ethereum broke its seven-week streak of outflows by attracting $30 million in investments. Other altcoins like Avalanche, Cardano, and Polkadot also saw inflows during this period. This shift in investment behavior indicates that institutional investors may be diversifying their portfolios beyond Bitcoin.

There was anticipation that Grayscale’s GBTC recording net inflows could potentially reverse the outflows seen in Bitcoin ETFs. However, the outflows persisted, with these funds recording a net outflow of $15.7 million. GBTC was particularly affected, with a net outflow of $28.6 million. These continuous outflows are putting significant selling pressure on Bitcoin, impacting its price negatively.

At the time of writing, Bitcoin is trading at around $62,300, showing a decline of over 2% in the last 24 hours. This price movement reflects the uncertainty and bearish sentiment surrounding Bitcoin among institutional investors, driven by the recent outflows from Bitcoin investment products.

The recent outflows from Bitcoin investment products highlight the bearish sentiment of institutional investors towards the flagship cryptocurrency. While some regions like Hong Kong show positive investment trends, the overall market outlook remains uncertain. The contrasting flows between Bitcoin and altcoins indicate a shift in investment preferences among institutional investors, potentially signaling a broader trend towards diversification. As Bitcoin continues to face selling pressure, its price and market stability will likely remain volatile in the near future.


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