Bitcoin falls to the $30,000 mark, what are institutions and whales doing?

As the cryptocurrency market continues to fall, its total market capitalization has fallen to $1.4 trillion, and the price of Bitcoin hits the $30,000 mark, blockchain analysts at CoinShares and Glassnode have uncovered signs of investor activity. Interesting combination.

There is evidence that investors are taking advantage of last week’s price volatility to move more assets into bitcoin, ethereum and other cryptocurrencies-based exchange-traded products. But it’s worth noting that, unlike retail investors, wealthy investors with large positions (known as whales) and institutions often have enough bottom-up funds to weather storms in the market.

According to a new report from CoinShares, over the past week’s events, net inflows to cryptocurrency investment products totaled $40 million, while bitcoin saw net inflows of $45 million, suggesting investors are taking advantage of the market to sell at lower prices. The price entered into the exchange-traded Bitcoin product.

The CoinShares report tracks exchange-traded cryptocurrency products such as Grayscale Bitcoin Trust (GBTC), which passively invests in Bitcoin (BTC) and mirrors its price movements. Shares of GBTC were down 19% over the past five days on Monday afternoon, compared with Bitcoin’s 23% decline.

James Butterfill, head of research at CoinShares, wrote in the report:

Interestingly, we haven’t seen a surge in investment product activity like we’ve historically seen during periods of extreme price weakness, and it’s too early to tell if this marks the end of the four-week period of negative sentiment.

One possible reason, while price weakness has caused Bitcoin and Ethereum to drop 50% from their all-time price highs in November, it’s still not as bad as previous bear markets.

Glassnode wrote:

The current price is still modest compared to the final lows of previous Bitcoin bear markets; July 2021 saw Bitcoin’s price fall by 54.2% compared to the 2015, 2018 and March 2020 bear markets It fell 77.2% and 85.5% after the all-time high.

Meanwhile, there has been some notable action in price speculation. Investors use futures (a type of derivative) to bet on whether the price of an asset will rise or fall. In the past week, a record $4 million has flowed into contracts shorting Bitcoin (a bet that the price of Bitcoin will continue to fall).

This brought total assets shorted against Bitcoin products to an all-time high of $45 million. Despite the record, Bitcoin long assets that are bullish on rising prices still far outnumber Bitcoin shorts. The $45 million short product is 0.15% of the AUM of the $30 billion bitcoin long product, according to CoinShares.

But the level of optimism about the market may soon wane.

In a Monday newsletter, Glassnode calculated that if bitcoin’s price falls to around $33,600 a coin, then cryptocurrency investors will face the same pressures seen in past bear markets. The price of Bitcoin did drop in the hours after Glassnode’s report on Monday morning, dropping as low as $30,516.07 before rebounding slightly.

CoinShares studies exchange-traded funds that provide indirect exposure to cryptocurrencies, while Glassnode analyzes blockchain data for wallets that have direct exposure to the cryptocurrency market.

According to their calculations, more than 60% of the network currently has unrealized losses.

Glassnode researchers noted:

These levels are consistent with the profitability seen in late 2018, and in the bear market of late 2019-2020. It should be noted, however, that both of these examples occurred before the market’s final capitulation event (the Great Plunge).

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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