TL;DR Breakdown
- Investors have experienced massive withdrawals as institutional investors cash in on their investments.
- The market shows resilience as institutional interests persist.
According to a recent report by CoinShares, the past seven weeks have seen a drawdown of $329 million from crypto funds, with last week alone accounting for investor withdrawals of $62 million. This decline in assets under management (AUM) is attributed to a rise in investors capitalizing on short positions, following a substantial 56% increase in cryptocurrency prices over the past year.
Institutional investors withdraw $62 million from crypto funds last week
CoinShares, which monitors the flow of money into exchange-traded products, mutual funds, and over-the-counter trusts tracking digital assets like Bitcoin, Ethereum, and altcoins, observed a notable outflow of $51 million from the Tron blockchain. However, CoinShares’ head of research, James Butterfill, noted that this might be due to a withdrawal of seed capital rather than any concerning developments.
Bitcoin crypto funds experienced a smaller outflow of $2.7 million, while the more volatile short-Bitcoin funds saw $6.3 million in outflows. Short-Bitcoin funds enable investors to sell the token at a high price, anticipating its purchase at a lower price in the future.
The report highlights that short-Bitcoin crypto funds accounted for 44% of total outflows among AUM, in contrast to long-Bitcoin crypto funds which constituted only 0.9% of outflows. Ethereum funds also witnessed withdrawals of $2.7 million during the same period, while XRP, Polygon, and multi-asset funds received approximately $1.6 million in weekly deposits.
The market show resilience as institutional interest persist
Despite these consecutive weeks of outflows, the cryptocurrency market does not appear to be heading in a wayward direction. Coinbase, a prominent cryptocurrency exchange, recently announced its plans to introduce “institutional-sized” futures contracts for Bitcoin and Ethereum. These contracts, aimed at institutional clients, will be based on the anticipated future prices of the digital assets.
Despite reduced trading volumes, both Bitcoin and Ethereum have seen their prices surge by over 50% in the past year, as reported by CoinMarketCap. This recent development indicates that investors still possess an appetite for digital assets. The launch of these institutional futures contracts by Coinbase further supports the notion that market participants remain optimistic about the future of cryptocurrencies.
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