Over the last week, institutional investors in the cryptocurrency market changed their bets away from Bitcoin ($BTC) and moved into Cardano ($ADA) and Ethereum ($ETH), as the product shorting BTC witnessed favourable inflows.
These inflows occurred amid a week in which digital asset investment products witnessed outflows of $423 million, the highest since records started by a significant margin. The last record outflows were seen in January of this year, at $198 million.
The outflows were not proportional to assets under management, as happened back in February 2018, when 1.6% of total assets under management were shifted away from crypto investment products. This week’s outflows constituted the third-largest on record by under-management assets at 1.2%.
CoinShares observed that geographically, outflows were almost entirely from Canadian exchanges and one particular provider. These outflows began on June 17 and are considered responsible for BTC’s dip below the $18,000 threshold this month.
The outflows were identified by Norway-based Arcane Research, highlighting that the Purpose Bitcoin ETF had an outflow of 24,510 BTC on Friday, June 17. This made it the most severe single-day redemption the fund has seen since it was launched on the Toronto Stock Exchange.
Those outflows led the fund to sell around $500 million worth of BTC at market pricing, which contributed to the selling pressure in the market. According to Arcane analyst Vetle Lunde, the big outflows are presumably driven by a forced sale in a major liquidation. The forced sale of the 24,000 BTC might have prompted BTC’s fall down to $17,600.
Bitcoin ETFs monitor the value of the flagship cryptocurrency and enable investors to obtain exposure to BTC without owning it directly. These funds may be purchased and sold on standard stock exchanges and actively add and sell BTC to match investor inflows and outflows.
Although BTC products had overall outflows of $453 million, Ethereum investment products witnessed roughly $11 million inflows, marking their first positive flows after 11 straight weeks of outflows.
Net flows by asset. Source: Bloomberg, CoinShares
Similarly, Cardano investment products had $800,000, increasing their total month-to-date inflows to $1.9 million. $TRX and $DOT investment products also experienced minor inflows, while $SOL products received $100,000 in outflows.
Short Bitcoin products, which were expected to gain when the price of the cryptocurrency decreases, received $15.3 million in inflows. Crypto prices have been tumbling over various macroeconomic concerns, including increasing inflation around the globe and the current Russian invasion of Ukraine, combined with crypto lenders Celsius Network and Babel Finance stopping withdrawals.
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Before BTC plummeted below $20,000, Fidelity’s Director of Global Macro, Jurrien Timmer, noted that Bitcoin’s P/E measure utilising the crypto’s price and network ratio was back to levels last seen in 2017 and 2013, even though the crypto’s price returned to late 2020 levels.
Meanwhile, former hedge fund manager Jim Cramer has recently indicated he expects the price of Bitcoin ($BTC) to decrease to $12,000.