Institutional crypto investors have become a lot more conservative after the problems at FTX. Unfortunately, it doesn’t look like it’s over yet. A new study shows that these investors prefer to get their money from the crypto market for the time being.
Crypto funds are seeing significant outflows
CoinShares writes this in its weekly research report. Last week, crypto funds saw $23 million outflows, which has not been this extreme in twelve weeks. It should be emphasized that these are listed companies fundsnot about individual crypto that are taken from exchanges.
It was also hit the week before, then funds that exclusively short bitcoin (BTC) saw record amounts of inflows. So these investors expect the price to fall, and apparently they are currently more bearish than ever.
But last week it was still net inflows, now money is flowing out of the market. The money that investors put into short funds is also seen as inflows, but despite the fact that many people are short, a lot of capital is leaving the market. Bitcoin, Ethereum (ETH), and Ripple (XRP) funds have been hit the hardest, with $10.1 million, $6.1 million, and $0.5 million in outflows, respectively. Yet other funds also saw red figures.
Digital asset investment products saw outflows totaling US$23m, with the only noticeable inflows being toward the short-BTC products.
The last time we saw this level of outflows was three months ago. pic.twitter.com/jcDcvusA8W— CoinShares 👩🚀 (@CoinSharesCo) November 28, 2022
FTX the cause?
CoinShares thinks that the cause lies with the fall of FTX. This platform was a huge figurehead for the industry and many companies had exposure to it. Many companies are therefore forced to sell, which could mean that this also affects funds. It is always difficult to estimate the cause of something, but we do know that even large institutions have been hit hard by FTX’s bankruptcy.
Perhaps a blessing in disguise: Binance CEO Changpeng Zhao believes that the bear market has made the industry a lot healthier. There are now a lot fewer air-based projects, as it should be.