Funds betting on bitcoin fall dominate inflows into crypto investment

Investment products that involve shorting Bitcoin dominated inflows over the past week, representing 75% of total inflows. The figure amounted overall to $18.4 million, suggesting deeply negative sentiment, likely being a direct result of the ongoing fallout from the FTX collapse.

Bitcoin in a few hands

According to the latest CoinShares report, total assets under management (AuM) have now shrunk to $22 billion, the lowest in two years, having started the year at $64 billion.

Despite additions to short bitcoin products, Bitcoin-based products saw inflows totaled $14 million. But when offset by the inflows into short investment products, the net flows were a negative $4.3 million. AuM on short-Bitcoin is now at $173 million, close to the record high of $186 million.

Breaking down the latest statistics, Coinshares said the aggregate data masks a significant regional polarization of views. In particular, inflows into short investment products were seen in both the US and Europe although some short products saw outflows implying opinion is divided amongst investors as to whether the market has reached its lows.

Apart from Bitcoin, Ethereum-based crypto investment products saw minor outflows totaling $0.8 million although it also saw the largest inflows on record into short-Ethereum investment products of $14 million. This negative sentiment is likely a result of renewed uncertainty over the Shanghai update, which will allow the withdrawal of staking assets, and the hacked FTX ETH assets which sum to ~$280 million.

Meanwhile, a raft of outflows was seen across altcoins, most notably Solana, XRP, Binance and Polygon totaling $6 million.

CoinShares is Europe’s largest digital asset investment firm. Earlier this month, the company posted third-quarter earnings that showed a marked improvement when compared with the second quarter.

Combined revenue, gains and other income was reported at £20.0 million, up 41 percent from Q2 2021’s £14.2 million. However, the figure was down by 24 percent when weighed against £26.2 million in the comparable period of 2021.

The company’s net asset position has increased 20% year-to-date, to £240.6 million at the end of Q3. This compares to £200 million it reported on December 31, 2021. Coinshares reported a loss of £0.1 million in the quarter ending June 30 from a positive income of £26.6 million the previous year. That was Coinshare’s first negative quarter since going public in March 2021.

The company attributed the net loss to its TerraUSD (UST) holdings. The London-based firm recorded an “exceptional” loss of £17 million (roughly $21.4 million) from its exposure to Terra’s token when it exited its UST position.