Institutional Investors Stop Betting Against Bitcoin, CoinShares Report Shows
Institutional investors have taken a different approach to Bitcoin, as outflows into short Bitcoin products have ceased for the first time in fourteen weeks, according to the latest fund report from CoinShares. This suggests that large digital asset funds are changing their strategy when it comes to the flagship cryptocurrency.
The report includes short products offered by various firms, such as Grayscale Investments’ GBTC fund, Bitwise’s 10 Crypto Index Fund, and ProShares ETF (BITO), among others. Short products allow investors to profit when the price of an asset, like stocks or cryptocurrencies, drops.
Typically, shorting involves borrowing the asset, in this case, Bitcoin, selling it on the open market, then buying it back at a lower price and repaying the loan.
The CoinShares report indicates a temporary pause in institutional investors’ short positions, but it highlights that these investors have been actively selling. Over $111 million has been sold across various Bitcoin-related funds in the past week.
According to James Butterfill, the head of research at CoinShares, this is the largest weekly outflow since regulatory scrutiny on the industry intensified in the United States.
Institutional investors are pausing their activities in light of several lawsuits against Coinbase and Binance, as well as the controversial labeling of certain tokens as unregistered securities.
Additionally, authorities have shuttered some banks associated with the digital asset industry, under somewhat questionable circumstances.
Altcoins Benefit from Bitcoin and Ethereum Sell Pressure
While institutional investors are pulling back on Bitcoin, select altcoins are benefiting from the sell pressure on Bitcoin and Ethereum, albeit to a lesser extent in the case of Ethereum.
Solana, a popular altcoin, has seen a significant increase in buying pressure from institutions in Europe and the United States. It experienced its most bullish week since March 2022, with $9.5 million in inflows.
Other altcoins like Ripple (XRP) and Litecoin (LTC) also had positive weeks, although they received less than $1 million in institutional interest.
According to CoinShares, most of last week’s selling was attributed to Canadian and German funds, with outflows of over $70 million and $28 million, respectively.
