Institutional Crypto Investments Decline as Hong Kong Approves Bitcoin ETFs
Summary:
The latest CoinShares report reveals that institutional investors have withdrawn $126 million from crypto investments in the past week, mainly Bitcoin. CoinShares attributes this decrease to a decline in positive investor sentiment. Before this, crypto funds had seen inflows amounting to $520 million, largely into Bitcoin. Despite somewhat volatile recent price action, analysis by CryptoQuant suggests there could be further price correction for Bitcoin. The timing coincides with Hong Kong's approval of Bitcoin ETFs, although their launch has been delayed until next week.
The most recent study by CoinShares indicates a small withdrawal from institutional investments in cryptocurrency over the last seven days. CoinShares disclosed in their recent weekly digital asset fund flows report, released April 15, that institutional investors have lessened their stake in digital currencies with a collective withdrawal of $126 million from crypto investment products in the past week. The significant majority of these withdrawals concerned Bitcoin (BTC), with a subtraction of $110 million. The report attributes this decrease to an increasing reluctance among investors following the decline of previous positive momentum. In the month preceding these recent withdrawals, cryptocurrency funds saw $520 million in new investments, primarily allocated to Bitcoin.
The weekly trading volumes of investment products increased from $17 billion to $21 billion for the week ending April 12, reports CoinShares. The firm's head of research, James Butterfill, noted a drop in exchange-traded products and exchange-traded funds relative to the wider market. He highlighted the investor caution evidenced by a decrease from 40% to 31% of total volumes on reputable exchanges over the past month. He noted this following substantial sales due to geopolitical instability and uncertainty around possible Federal Reserve rate reductions in June. Institutions pulled back almost $82 million from Bitcoin exchange-traded funds between April 8 and April 12, continuing a trend initiated by the departure from Grayscale's GBTC.
The report shows that only Germany, Australia, and Brazil experienced incoming investments, receiving $28.6 million, $1.6 million, and $3 million respectively. Conversely, the United States underwent the most significant regional withdrawals, totaling $145 million.
Despite Bitcoin's stability over wider timeframes, its price has recently been characterized by significant flux. Data from TradingView and Cointelegraph Markets Pro indicates that Bitcoin experienced a significant fall on Monday when Wall Street opened, dropping from $66,008 to a daily low of $63,940.
CryptoQuant, a cryptocurrency analyst firm, suggests it's likely that Bitcoin will see further price correction. Their forecast is based on a trio of factors: high 30-day average funding rates, resistance from the currency's record high, and a market configuration that enables influential players to establish significant positions.
This drop in Bitcoin price coincides with Hong Kong's approval of spot Bitcoin exchange-traded funds, the second nation to do so, although the expected launch of these funds has been delayed. Bloomberg ETF analyst Eric Balchunas cautions that trade from these Hong Kong ETFs is likely to commence in the coming week but warns not to anticipate substantial flows due to the relatively small market size compared to the U.S. ETF section.
Investor sentiment towards these Hong Kong ETFs has been dampened, and, in conjunction with Middle Eastern geopolitical disruption, Bitcoin prices are expected to drop until after the halving of Bitcoin supply. Readers should conduct their own research before making any investment or trading decisions as the content of the article does not represent investment guidance or recommendations and any trading or investment decision involves risk.
Published At
4/15/2024 10:09:36 PM
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