As institutional investors pull the plug, outflows hit bitcoin; is there more harm to come?
Since the price of cryptocurrencies like Bitcoin started to fall, outflows have become the norm. Individual and institutional investors also shared the same opinion, which sparked significant sell-offs in the sector. Despite the recent recovery in the price of bitcoin, it appears that the sellers are still at work as outflows accelerated over the previous week. With inflows during the previous week, the trend for Bitcoin has been reversing. This, however, has only been temporary since outflows have persisted in shaking the digital asset. According to CoinShares, bitcoin has been leading the outflow trend over the past week, with net outflows totaling $453 million for the digital asset.
This comes after a week in which the price of bitcoin fluctuated about $20,000. For the last week, it was anticipated that the cheap prices would encourage additional market inflows, but the reverse has happened. At $24.5 billion, the total assets under management (AuM) for bitcoin are at their lowest point in more than a year. While inflows were the rule of the week, its short-bitcoin counterpart had taken a different route. The first US-based short investment product, which debuted last week, is credited with bringing in $15 million. All signs point to the previous short-bitcoin investment products, which had outflows during the same time period.
The North American market segment is the only one where the outflows have been concentrated. It becomes clear that inflows of $70 million had been recorded by other providers when these outflows are eliminated and marked to the appropriate time frames. At the beginning of the year, when $198 million left the market in a single week in January, record outflows were last observed. Although the ratio to assets under management remains modest compared to the bear market outflows of 2018, when outflows had reached as high as 1.6 percent of total AuM, the outflows recorded for last week have exceeded this by more than 100%.