According to recent data, institutions aren’t “buying the [Bitcoin] dip.”
Covered:
- Institutions Leery
- Worsening Macro
Institutions Leery
Data from ByteTree shows a decline in bitcoin held by the U.S. and Canadian funds (and Canadian and European ETFs and ETPs.) The current levels put us around where we were in early November. The main question is: what, if anything, will cause institutions to begin buying again?
Before we explain what is going on with institutions, a good sign for bitcoin is the market recently cutting down on shorting bitcoin, as measured by the cost of puts (bearish bets) relative to calls coming down from 17% to nearly 0% since last Monday, according to data provided by the crypto derivatives research firm Skew.
However, it appears that there just isn’t the demand we would like, or care to imagine there is, at least according to analyst Laurent Kssis, a crypto exchange-traded fund (ETF) expert and director of CEC Capital.
Kssis said in a recent interview “a good barometer is always the asset under management and inflows into crypto exchange-traded products and ETFs. So far we have recovered only $1 billion of inflows versus $4 billion that has left these products alone in January.”
The above image is what Kssis is referencing, and this data shows that BTC held by certain institutions has declined by 8,812 BTC ($377 million) since mid-December. According to a recent report from Arcane Research, exposure to bitcoin futures ETF’s has also declined.
“BITO (ProShares Bitcoin Strategy ETF) now holds less than 5,000 CME futures contracts for the first time since November, and its AUM has reached its lowest level since Oct. 19, signaling dwindling interest for BTC exposure through futures-based ETFs.” More or less, retail is waiting on institutions to step in and save a potential bear breach below 40k.
Recommended: Data Shows Stocks Historically Overvalued – What Does This Mean For Crypto?
Worsening Macro
Moreover, the macro factors for Bitcoin are not the best, either. As we reported on December 6th, Bitcoin’s correlation with the stock market is real, and we also highlighted how overvalued equities were at the time, which has born out to be the correct call. According to the Amber Group, an institutional crypto service, the Bitcoin and equities correlation has even increased.
The fact that equities are incredibly weak right now as the Fed turns the spigot off and at least vows to trim their balance sheet is one reason institutional investors may not be coming to rescue anytime soon. Since mid-November, Bitcoin has declined almost 40% during the same period that the 10-year treasury has jumped 50 basis points. Which highlights an ever-increasing tether to trad-fi and macro sentiment.
As Into The Block pointed out in a weekend report, there is a “strong statistical relationship” between Bitcoin and the M1 Money supply, which is just how many dollars are in circulation. This means that if the Federal Reserve decides to raise interest rates, this means the cheap money flow dries up, and considering the relationship, would be bad for bitcoin.
All things considered, it seems quite clear that bitcoin is ready to re-test the 40k support level, and if so, will bulls hold the line, or will be plunge lower? Institutions waiting on the sideline and a bleak macro outlook make it appear the bears will prevail in the short-term.
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