Bitcoin consolidates at $20,000, but institutional investors remain bearish on cryptos
The cryptocurrency market is in for another day of trying to consolidate recent moves in major tokens, with their total capitalization nearing $920 billion, according to data from CoinMarketCap. Bitcoin clings to $20,000, while Ethereum advances above $1,150, but experts warn that crypto assets are not remotely far from danger yet, as more selling and further downward pressure is expected.
Negative sentiment remains among market participants. Good proof of this is that CoinShares reported inflows of $51 million into the newly launched ProShares Short Bitcoin Strategy ETF (BITI) product. This investment vehicle bets against Bitcoin´s price, showing that institutions are bearish on the asset. "However, the inflows could be attributed to the fund being one of the first to allow institutional traders to gain short exposure, rather than an increase in negative sentiment," commented Marcus Sotiriou, analyst at GlobalBlock.
This surge in Bitcoin short fund inflows comes weeks after institutional investors withdrew more than $423 million from other cryptocurrency-focused vehicles. "This is a result of the current uncertainty with the macro environment as the risks of a recession worsen," Sotiriou stated.
On the other hand, US institutional investors are still waiting for a spot fund on Bitcoin. However, despite many institutions showing explicit interest in an ETF on the queen of cryptocurrencies, something that would also provide a clear measure of the institutional mood on cryptos, the US Securities and Exchange Commission (SEC) rejected Grayscale's recent application to convert the Grayscale Bitcoin Trust into a Bitcoin spot exchange-traded fund. The SEC noted that Grayscale Investments failed to address concerns about market manipulation and concluded that the proposal lacked an adequate method to protect investors.
Grayscale Investments, the world's largest digital currency asset manager, filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) challenging its decision.
Grayscale CEO Sonnenshein stated, "We believe U.S. investors overwhelmingly expressed a desire to see GBTC converted into a spot Bitcoin ETF, which would unlock billions of dollars of investor capital while bringing the world's largest Bitcoin fund into the U.S. regulatory perimeter." "Grayscale claimed that 99% of the letters sent to the SEC support the spot Bitcoin ETF.
"I agree with Sonnenshein and believe the U.S. delay may play against them, as other countries offer these spot Bitcoin products, with the Netherlands launching one next month. In purporting to protect investors, the SEC may be hurting them instead, as some turn to the futures ETF, which is accompanied by brokers with added fees," commented Sotiriou.