• Sun. Aug 14th, 2022

Low Bitcoin Prices Trigger Inflows, But Investor Sentiment Remains Weak

ByHazel R. Lang

Jun 23, 2022

The reactions of institutional investors to the bitcoin price crash have been quite similar to those of retail investors. After weeks of exits, the tides have started to change, thanks in large part to low prices providing a chance to enter the digital asset ahead of a rally. Last week saw entries for the digital asset, although other assets tell a different story.

Bitcoin sentiment is recovering

Bitcoin sentiment had fallen far into the negative after the price plunge last week. With the digital asset reaching as low as $17,600, it sparked a sell-off across the space. However, not everyone in the space had seen the price drop as a sell signal. For some, this represented a once-in-a-lifetime opportunity to get “cheap” bitcoin, something you see with institutional investors.

Bitcoin outflows had increased over the previous week due to weak market momentum. This had improved last week when the trend out was reversed and money started flowing into the cryptocurrency.

Related Reading | Bitcoin Miner Liquidations Threaten Bitcoin Recovery

The major cryptocurrency benefited the most from this turnaround in investor sentiment, with inflows rising to $28 million for the week. Now, that’s not exactly an impressive number when it comes to bitcoin inflows. However, it is important not only because of market sentiment, but also because outflows had characterized the market the previous week. This brings monthly bitcoin inflows to a total of $46 million.

Nevertheless, the bitcoin short was gone the other day. This asset saw record outflows last week. With a total of $5.8 million, short bitcoin epitomized the negative sentiment felt in the market recently, after hitting a new all-time high of $64 million just at the start of the week.

BTC begins another decline trend | Source: BTCUSD on TradingView.com

Exits shake up the rest

It looks like bitcoin would be one of the only beneficiaries of the inflow trend of the past week. For the rest of the market, the sell-off trend had gained momentum and digital asset investment saw inflows of $39 million. This brings total assets under management to $36 billion. It now sits at its lowest point in more than a year, representing a 59% decline in the past six months alone. However, net flows remain positive at $403 million year-to-date.

Related Reading | By the Numbers: The Worst Bitcoin Bear Markets Ever

Ethereum is not yet released from its bearish grip, as exits remain on the agenda. For the past week alone, Ethereum outflows had reached $70 million. The second-largest cryptocurrency by market capitalization has now seen 11 straight weeks of exits with no reprieve in sight. Its year-to-date releases now stand at $459 million.

Multi-asset investment products and Solana, however, have reportedly been following bitcoin’s path since last week. Both of these asset classes are stubbornly maintaining inflow trends. Inflows for multi-asset investment products were $9m while Solana saw inflows of $0.7m, presumably from investors exiting competitor Ethereum over fears that the merger does not go as planned.

The crypto market has lost over $100 billion since last week. It currently sits at $892.6 billion at the time of this writing.

Featured image from US News Money, chart from TradingView.com

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