It seems that institutional investors, the wealthiest investors in the market, are shocked by the crackdown by the US authorities. CoinShares reported that institutional crypto products had an outflow of $32 million last week. This outflow immediately marks the largest of the year 2023.
What is going on?
You may have noticed that the US authorities have been attacking the industry in various ways in recent weeks. Kraken was forced to close its staking program in the United States, Paxos is no longer allowed to issue new Binance USD (BUSD) stablecoins and that is not the only thing. The Securities and Exchange Commission (SEC), the financial watchdog of the United States, is clearly on the warpath.
During the week, net outflows for institutional investment products even reached $62 million. Fortunately, towards the end of the week there was some improvement and the products ended up with an outflow of $32 million.
The majority of the outflows came in the name of Bitcoin. Strangely enough, that is at a time when the price is doing well. Institutional investors may see breaking the $25,000 price as a good time to exit. We also have to recognize that the bulls are having a hard time crossing this line from the bears.
Short on Bitcoin
On the other hand, a Bitcoin short fund saw an inflow of $3.7 million. With a short fund, investors can gamble on a Bitcoin price fall. If that happens, they will make a profit with this fund. However, it is also important to note that these are not the amounts that actually shake the market. After all, an outflow of USD 32 million is not very exciting on a total market cap of more than USD 1.1 trillion.
It mainly indicates that sentiment among wealthier investors is currently not in favor of further price rises. But this group of investors is nothing strange to humans either. They also get in en masse when there is a hype around Bitcoin and get out during the bear market. Institutional investors also do not have all the wisdom when it comes to prices.
