Institutional Investors on the Fence: Why it’s Good for the Current Crypto Market
  • It’s been a shaky season for the market as cryptocurrency prices have been unstable, leaving investors indecisive.
  • Institutional investors jumped into crypto earlier this year with high hopes, but are now on the fence as capital flow for institutional products crashes.
  • In other developments, Fidelity Digital has doubled down with an expanded workforce following high crypto demand.
  • Experts and users have begun to express the opinion that investors being on the fence is good for the market.

Market Volatility Strikes Again

The volatility of the market not only affects the price of cryptocurrencies, but goes as far as to affect crypto-related products offered by institutional investors.

This is nothing new as the media may want to make it seem. Just as with every other market, there are shaky seasons for every asset.

With the market crash in this quarter which saw bitcoin lose over 46% of its value, , which was flying over the $4,000 marker and receiving huge institutional support, is now struggling, trading at below $2000.

The market has shown positive signs of recovery, but isn’t impressing institutional investors as they remain on the fence in the face of the latest crypto product outflows.

Crypto Products Hit Their Weakest Point Since October

According to a report, crypto investment products saw a rapid rise in outflow, posting the weakest volume recorded since October.

Investors are now cautious about expanding into the market, against their initial drive earlier this year. products have gotten more outflow in eight of the last nine weeks. Over $6.5 million left Bitcoin in tracking products.

ETH on the other hand saw a minor inflow of $800,000, a shadow of its former glory. Investors are now spreading their risk across the sector with multi-asset products seeing an inflow of $1.2 million.

A total of $1.58 billion worth of assets changed hands last week, according to CoinShares’ “Digital Asset Fund Flows Weekly.”

What Does This Mean for Investors and the Market?

Though this week saw massive outflows from BTC and the market in general, it is still generally good for the market as a whole.

Every asset has its rough times, and it is well recorded that cryptos always bounce back on a high. This is simply a cycle to wait out.

Chris Burniske, the founder of Placeholder, a firm that invests directly in digital assets, believes that we are about to witness a major uptrend after this current cycle.

Institutional investors being on the fence isn’t a negative, as a major rally is bound to follow, in which institutional investors would play no small part. The hesitancy of institutional investors will scare crypto traders, however.

On The Flipside

  • Amid massive outflow from BTC products, European Bitcoin products saw a great amount of inflow.
  • Capital International Group has acquired a stake in MicroStrategy, showing an institutional push into crypto.

Fidelity Digital Keeps Pushing

Fidelity Digital is expanding its staff strength by 70% due to high crypto demand. Tom Jessop, President Fidelity Digital Assets, says that the firm wants to be ahead of demand as it has noted a rising interest in Ether.

He further added that

“2020 was a real breakthrough year for the space, given the interest in Bitcoin when the pandemic started.”
Fidelity Investment’s expansion of the Fidelity Digital team will likely see them take on an additional 100 employees in the Boston area.

Fidelity Investments has filed for a Bitcoin ETF and has rolled out Sherlock, an analytics tool for institutional investors for digital assets

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