Short Bitcoin investment products record massive inflows from institutional players

• After the launch of ProShares short Bitcoin ETF, institutional inflows into the product have surged.
• Ethereum investment products also witnessed their second consecutive week of inflows after severe outflows earlier this year.

The world’s largest cryptocurrency Bitcoin (BTC) has been trading under severe pressure at around $20,000. Last week, selling pressure was visible as BTC traded around $19,000 for a majority of the time.

Last week, short-Bitcoin investments products saw major inflows as per data from CoinShares. In its “Digital Asset Fund Flows” report, CoinShares said that in the week between June 27 and July 1, digital asset products witnessed $64 million worth of inflows. Of them, short Bitcoin products represented 80 percent or $51.4 million worth of investment.

The U.S.-based investors accounted for a massive share at $46.2 million. The demand for short-BTC investment products was significantly higher after ProShares launched its first-ever short Bitcoin exchange-traded fund (ETF) on June 22. The ProShares short Bitcoin ETF trades under the ticker BITI. It offers Bitcoin shorting exposure via futures contracts. In its report, CoinShares mentions:

This highlights investors are adding to long positions at current prices, with the inflows into short-Bitcoin possibly due to first-time accessibility in the US rather than renewed negative sentiment.

As per the report, institutional investors from Brazil, Canada, Germany, and Switzerland, poured a total of $20 million into crypto investment products. On the other hand, Sweden has partially offset that figure with $1.8 million in net outflows.

The short Bitcoin (BTC) inflows so far in 2022 have surpassed $77.2 million. This figure has only been behind multi-asset products having inflows at $213.5 and short Solana products with inflows at $110.3 million.

Crypto asset inflows

Last week, crypto-asset products offering exposure to Ethereum (ETH) witnessed net inflows of $4.9 million. This was the second-consecutive week of inflows for Ethereum (ETH) products after 11 consecutive weeks of outflows. Last week, the Ethereum (ETH) price also skyrocketed above $1,200.

But so far this year, the Ethereum investment products have net outflows of $450.9 million. Over the last weekend, Ethereum was once again under selling pressure with prices turning down to $1,000. But ETH continues with its volatile price movements and is currently trading up 10 percent at a price of $1,156 levels with a market cap of $141 billion.

However, this could be just another dead cat bounce for ETH as the current price surge has no catalyst to take it further. The global macroeconomic conditions continue to remain uncertain. The inflation numbers for June are likely to be higher and the risks of the U.S. slipping into recession have been growing.

Another concerning signal for ETH is on-chain metrics. As per on-chain data provider Santiment, the ETH supply to exchanges has surged to its highest in six months. The data provider notes: “Ethereum price has rebounded mildly to ~$1,120 on America’s birthday. This said, $ETH continues to move rapidly back onto exchanges and is close to breaking 2022 highs. There is a higher risk of a selloff while coins are rising on exchange wallets”.

On the other hand, the CoinShares report notes: “Multi-asset (multi-crypto) investment products saw inflows totaling US$4.4m and remain the least affected by recent negative sentiment with minor outflows in only 2 weeks of this year”.