Institutions flee crypto funds with $417 million withdrawn in two months

Author: BitpushNews Mary Liu

After last week's sharp sell-off, bitcoin and ethereum both started the week with modest losses, down 0.6% and 1%, respectively. Bitweet terminal data shows that as of press time, BTC fell to $25,830 and ETH fell to $1,733. Bitcoin is down 3.5% over the past seven days, but Ethereum is down even more, down 7.5% over the past seven days.

Hernán Yellati, head of global macro research at CTF Capital, an encryption research company, said that **although the encryption market has mainly reacted to the SEC vs. No clear direction in sight. **

He wrote on June 12: “The industry tension between the SEC and the crypto industry intensifies as market participants and lawmakers criticize the SEC chairman for regulating through enforcement and risking America’s abandonment of a technology and innovation hub. Meanwhile, other jurisdictions, such as Hong Kong, are inviting US companies to apply for licenses and operate outside their jurisdictions.”

Institutional investors withdraw $417M from crypto funds in two months

Institutional investors are fleeing like crazy. Large crypto investors pulled $88 million out of digital asset funds last week, bringing the two-month outflow total to a staggering $417 million, according to Coinshares’ weekly money report.

Bitcoin funds had the largest outflows, with $52 million outflows in the past 7 days, and institutional investors sold Bitcoin funds heavily, with year-to-date outflows reaching $172 million.

Ethereum funds ranked second in outflows last week, totaling $36 million, a figure that marked the largest weekly outflows since Ethereum merged last September.

CoinShares tracks the investment activity of key exchange-traded products, mutual funds and over-the-counter (OTC) trusts in cryptocurrencies such as Bitcoin, Ethereum and other altcoins and publishes its findings in weekly reports.

Regionally, North America accounted for 87% of total outflows, with Canada-based fund 3iQ topping the list with $76.9 million in outflows and inflows from Swiss crypto fund providers, the report showed. $9.2 million for the German crypto fund provider and $9.4 million for the German crypto fund provider.

James Butterfill, director of research at CoinShares, said he thinks all the sell-off has been triggered by monetary policy: "There's no end in sight for rate hikes right now."

Short-term holders show higher activity

On-chain data tracked by Glassnode shows that **after the SEC sued Binance and Coinbase, short-term cryptocurrency holders showed higher activity, accounting for 76% of recent BTC deposits (compared to 60%). Such deposits represent 0.93% of the total balance held by short-term holders on exchanges. In contrast, long-term holders "did not visibly react to news of the lawsuit." **

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After the SEC announced its lawsuit against Binance last week, Binance saw an immediate increase in withdrawals. The platform’s Bitcoin and Ethereum balances have decreased by 40,200 BTC (5.7%) and 324,000 ETH (7.1%), respectively, over the past seven days.

Meanwhile, Binance’s BUSD stablecoin balance was hit the hardest, down $1.6 billion (20.9%) over the past week. Since the FTX crash in November 2022, Binance's stablecoin balance has plummeted 75% from $26 billion to just $6.5 billion today. “The exchange still holds the largest reserves of any on-chain entity, and their BTC and ETH balances remain sizable,” Glassnode said.

Coinbase’s withdrawal volume is lower than that of Binance, only 2300 BTC (0.5%). However, Ethereum withdrawals reached 291,000 ETH (8.0%), which may indicate heightened investor concerns about Coinbase’s staking-as-a-service offering. **

Macro events dominate the wind direction

Analysts at CryptoQuant said that despite the subdued Bitcoin price, the possibility of its upward trajectory is not over yet as it continues to consolidate in the $25,000-$30,000 range. The analyst explained in a blog post: "According to the short-term holder SOPR (Spent Output Profit Ratio) indicator, when the number of this data remains at the first place for several consecutive months, and the unrealized value of these holders exceeds the When it is below that level, it shows that they have a strong interest in staying in the market and making a profit. The price cycles of 2015 and 2019 are good examples.”

Therefore,** when comparing the current cycle to 2019, analysts note that the profitability of both long-term and short-term holders has not yet been high enough to trigger heavy selling pressure, a trend that essentially suggests that Bitcoin has the potential to follow suit. Grow with another wave of demand. **

Crypto traders will focus on tomorrow's CPI data for May and the Federal Open Market Committee (FOMC) interest rate decision due on Wednesday, Yellati said: "We expect a pause in the rate hike cycle, leaving the door open for future data-dependent moves, Tomorrow's CPI data will be a key part of the FOMC decision the next day."

Since the policy tightening cycle started in March 2022, the Fed has raised interest rates 10 times in a row. Traders are now pricing in about a 75 percent chance the Fed will pause rate hikes, according to the CME Fedwatch Tool.