CoinShares Report: Investors Have Stopped Shorting Bitcoin for First Time in 3 Months

Institutional investors have halted their bets against Bitcoin, marking a significant shift in market sentiment, as revealed by CoinShares’ latest fund report.

James Butterfill, CoinShares’ head of research, said in the report that outflows from short Bitcoin (BTC) products have stopped after a continuous fourteen-week period. This change indicates that major digital asset funds are adopting a new approach to the leading cryptocurrency.

Short products, which enable investors to profit from the decline in the value of an asset, whether it’s a stock or a cryptocurrency, have been a popular strategy in the market.

Shorting, on the other hand, is a practice in which an investor borrows an asset—in this case, Bitcoin—and subsequently sells it on the open market with the aim of buying back the asset at a lower price and then repaying the borrowed amount.

While the report suggests that institutional investors might be refraining from shorting Bitcoin for now, they have been actively engaged in selling activities. Over the course of the past week, the Bitcoin-related funds have experienced a collective sell-off totaling more than $111 million.

The report also insinuates that digital asset investment products saw outflows this week, totaling $107 million, with profit taking gathering pace in recent weeks.

Butterfill emphasized that this weekly outflow is the most substantial since the United States regulatory authorities heightened their scrutiny of the cryptocurrency industry.

In light of ongoing legal actions against prominent platforms such as Coinbase and Binance, as well as the contentious classification of certain tokens as unregistered securities, institutional players are adopting a cautious stance and pulling out in fear.

Recent regulatory actions have also led to the closure of some banks linked to the digital asset sector, raising questions about the future of the industry.

Not Only Bitcoin, The Focus Shifted To Altcoins

Interestingly, while Bitcoin and Ethereum face selling pressure, certain alternative cryptocurrencies (altcoins) are benefiting from the situation, to varying degrees.

Solana has witnessed a surge in buying activity from institutional investors across Europe and the United States, marking its most bullish week since March 2022, with inflows reaching an impressive height of $9.5 million.

Ripple (XRP) and Litecoin (LTC) have also shown positive uptrends, although the level of institutional interest in these altcoins remains below the $1 million mark.

CoinShares’ data highlights that the majority of last week’s selling was attributed to Canadian outflows of more than $70 million and German outflows of more than $28 million.

NB: Any Information provided here is NOT FINANCIAL ADVICE. Do Your Own Research before making any Financial Decisions.