$20 million has been lost by bitcoin funds. What is going on?

Recently, bitcoin has been regaining ground. Additionally, funds that provide exposure to the asset have been doing well. Consider the Canada’s Purpose ETF as an example. BTCC was trading at its regional lows at 3.7 CAD in mid-July. But as of right now, it costs 4.7 CAD.

In the same time frame, the US-based ProShares Bitcoin ETF grew from $11.6 to $14.8. BTC, BTCC, and BITO have all risen by the same 26%–27% over the previous month when considered collectively.

Institutional flows for bitcoin are once again negative.

Even while the pricing environment seems positive, it should be recalled that institutions have generally been selling off their investments. According to the most recent statistics from CoinShares, Canada had the largest outflow of institutional investment products ($25.7 million) last week. And Purpose alone made a $7 million contribution to the same. Last week, ProShares also sold off assets worth approximately $10 million.

The largest negative flows were seen in investment products tied to bitcoin, when broken down by asset. According to the study, which confirmed this,

Since this was the second straight week of withdrawals, bringing the month-to-date outflows to US$29m, Bitcoin has borne the brunt of the outflows, which last week totaled US$21m. There were little inflows totaling US$2.6m for short bitcoin.

Institutions’ function

Well, there is yet some chance. Although there have been negative flows, Bitcoin’s fundamentals are still “pretty solid.” In the long run, the same would “cause a demand shock,” according to Anthony Scaramucci of Skybridge Capital.

The CEO expressed his optimism in an interview with CNBC, noting that “two key things have transpired on the institutional side,” which he believes would increase demand for Bitcoin. He described the first event in detail.

“Fidelity is enabling Bitcoin to be offered in its 401k packages.”

Notably, FinServ firm Fidelity Investments now allows businesses to provide workers the choice to invest up to 20% of their retirement and savings plan in Bitcoin. The same indicates progress and highlights the growing adoption. In spite of the losses sustained during the global bad market, a recent WSJ report claimed that pension funds in North America are still positive on cryptocurrencies.

The second factor, according to Scaramucci, that will be a game-changer is Blackrock’s provision of a private trust for customers to invest in Bitcoin. Notably, the investment management company recently established a collaboration with Coinbase that enables its institutional customers to purchase Bitcoin. The company has over $8.5 trillion in AuM.

So, certainly, the firms will be forced to raise their AuMs over time as the demand for these Bitcoin-related financial products increases. And when that occurs, the fund flows will naturally pleasantly float in the positive region, and the price of bitcoin will likewise soar. However, institutional attitude will remain undecided in the near future.

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