Institutional Investors Shorting BTC Made up 80% of Weekly Inflows

Key Insights:

• There was $64 million worth of inflows for digital asset products between June 27 and July 1.
• BTC funds represented 80% of the inflows. 
• U.S-based investors accounted for $46.2 million worth of inflows.

Institutional investors are shorting Bitcoin (BTC) at a record pace. According to new data from CoinShares’ Digital Asset Fund Flows report, there was $64 million worth of inflows for digital asset products between June 27 and July 1, with short BTC funds representing 80% of that figure.

Indeed, institutional investors are growing bearish on Bitcoin, which recently dropped below $20,000 for the first time since December 2020. The crash is reminiscent of similar market corrections in 2013 and 2017, which saw Bitcoin’s value drop by more than 80%.

The world’s largest cryptocurrency is currently down 71% from its all-time high of $69,044 set in November 2021.

Demographics

U.S-based investors accounted for $46.2 million worth of inflows, with demand for short BTC investment products being especially high as last month ProShares announced the launch of an exchange-traded fund that allows investors to bet against the price of Bitcoin.

The ProShares Short Bitcoin Strategy (BITI), which is designed to deliver the inverse of Bitcoin’s performance by enabling investors to bet on the future fall in its value, trades on the New York Stock Exchange.

In addition, the report highlighted how institutional investors from Brazil, Canada, Germany and Switzerland bought a combined $20 million worth of crypto investment products last week.

Sweden partially offset that figure with $1.8 million worth of outflows.

Additional Findings

In terms of inflows for other digital asset products, those offering exposure to Ethereum (ETH) generated $4.9 million, marking the second consecutive week of inflows after a 11-week downtrend for the world’s second-largest cryptocurrency.

Nonetheless, year-to-date ETH funds are still down with $450.9 million worth of outflows.

The rest of the inflows were spread across multi-asset funds at $4.4 million, while BTC, Cardano (ADA), Solana (SOL) and Polkadot (DOT) products also posted inflows of $600,000, $600,000, $1 million and $700,000, respectively.

This means that short BTC products have seen year-to-date inflows totalling $77.2 million, with that figure placing it behind only multi-asset products and Solana products, which have posted $213.5 million and $110.3 worth of inflows this year.

Last month, institutional crypto products saw record outflows totalling $423 million, with Canadian investors representing nearly all of the outflows. This figure was partially offset by $70 million worth of inflows from five other countries.

U.S-based investors accounted for more than half of the inflows with $41 million, while Germany and Switzerland accounted for inflows totalling $11 million and $10.4 million, respectively. Comparatively, Brazilians and Australians contributed with minor inflows of $1.6 million and $1.4 million.

Overall, the aforementioned outflows amounted to $422.8 million, which represented the largest weekly shedding by institutional investors since CoinShares records began. For perspective, this figure was $198 million in January this year.