Institutional Investor Confidence in Digital Currencies Falters, Bitcoin Experiences Sell-Off

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Sun, 04 Jun 2023, 02:13 PM
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Institutional Investor Confidence in Digital Currencies Falters, Bitcoin Experiences Sell-Off

Declining Investments and Outflows Reflect Wavering Sentiment in the Cryptocurrency Market

Tue, 23 May 2023, 14:54 pm UTC

Last week saw another downward shift in institutional investor enthusiasm concerning digital currencies, primarily driven by the wavering confidence in Bitcoin, causing further backpedaling in investments in digital assets.

The most recent "Digital Asset Fund Flow Analysis," issued by CoinShares, revealed a decline of $32 million in cryptocurrency fund investments between May 15 and May 19, marking the fifth consecutive week of diminishing investments.

James Butterfill, the lead researcher at CoinShares, drew attention to the repetitive nature of the past five weeks, with Bitcoin bearing the brunt of the negative impressions. The recent week's institutional sell-off resulted in a cumulative $231.7 million in outflows throughout this interval.

Analyzing the five weeks from April 21 to May 19, Bitcoin's value slipped by about 5% to settle at $26,799. According to CoinGecko, the current price of Bitcoin stands at $27,400.

Butterfill highlighted that Bitcoin's investment products had witnessed $111 million in outflows this year. A staggering 90% of that amount was recorded in May, while Bitcoin shorting products saw outflows amounting to $35 million during the same month. Meanwhile, Butterfill expressed uncertainty over the negative sentiment towards long and short investment products.

Despite this, the past week recorded Bitcoin product outflows worth $33 million. However, this was partially compensated by a $1.55 million inflow towards multi-asset products, Litecoin (LTC) received $300,000, and Ripple (XRP) got a boost of $200,000.

The week also saw the second-largest outflow in short Bitcoin funds as investors trimmed their stakes by $1.3 million. Ether (ETH) also experienced a similar trajectory with $1 million in outflows.

In the coming months, the cryptocurrency market will traverse an interesting and unpredictable landscape as investor sentiment and market triggers potentially shape its future.

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