Institutional Investors Withdraw $1.94B from Bitcoin and Crypto Funds

Institutional Investors Withdraw $1.94B from Bitcoin and Crypto Funds – Potential Relief Ahead

Last week, institutional investors withdrew a substantial $1.94 billion from digital asset funds amid a significant drop in Bitcoin's price. This trend has persisted for several weeks, raising concerns about market sentiment. However, recent data suggests a possible shift towards stabilization in the crypto sector, with a critical price level to watch.

Key Takeaways

Withdrawal Figures: Investors pulled $1.94 billion from digital asset funds, largely due to Bitcoin's decline.
Market Stabilization: Data indicates that forced selling may be coming to an end.
Potential Turning Point: The next movements will hinge on Bitcoin's price dynamics and whether institutional investors have stopped selling.

Institutional investors pull $1.94B from Bitcoin, crypto funds - But relief may be near

Institutional Withdrawals Hit Record Levels

Digital asset funds have experienced a substantial outflow of $1.94 billion in the past week, marking the fourth consecutive week of redemptions and one of the largest withdrawal periods since 2018. According to CoinShares, the cumulative outflow now stands at $4.92 billion, representing 2.9% of total assets under management (AUM), indicating a near-freeze in institutional sentiment.

Most of the withdrawals stemmed from Bitcoin, which saw $1.27 billion exit the asset. Ethereum followed with $589 million in outflows, accounting for 7.3% of its AUM. Other notable withdrawals include Solana, with $156 million, while Ripple's XRP managed to gain $89.3 million in inflows.

bitcoin

Source: CoinShares

Despite this trend, a notable change occurred last Friday, with a positive net inflow of $258 million, indicating that institutional investors may be beginning to ease their selling activities. Supportive data from ETFs also bolsters this perspective.

bitcoin

Source: SoSoValue

Last week, Bitcoin ETFs experienced several major redemption days, including one with nearly $900 million in outflows. Ethereum also faced $589 million in withdrawals, representing about 7.3% of its AUM. However, on Friday, both BTC and ETH ETFs saw strong inflows, with Bitcoin attracting over $200 million in a single day. While this does not completely negate the prior losses, it indicates a slowdown in selling pressure.

No Evidence of Prepare-for-Sale Strategy

Data from CryptoQuant suggests that the market did not indicate a preparation for further selling. Instead, the reverse seems to be true, with significant negative netflows observed in Bitcoin and Ethereum.

bitcoin

Source: CryptoQuant

Bitcoin experienced one of its largest single-day outflows of the quarter with over 350,000 BTC moving off exchanges as prices lingered around the low-$87K range. Similarly, Ethereum saw over 1.7 million ETH exit during a notable price drop.

bitcoin

Source: CryptoQuant

Typically, large outflows during a sell-off signify that investors are moving assets back into self-custody rather than hastily selling. Coupled with the modest ETF inflows at the end of the week, the most severe forced selling might now be behind us.

The Price Level Under Observation

All these developments relate closely to Bitcoin currently trading below its Active Realized Price of approximately $88,800. When Bitcoin lingers under this level, many active investors are experiencing losses, which often prompts institutions to reduce risk. This aligns with the observed redemptions, even though exchange flows do not indicate panic selling.

bitcoin

Source: CryptoQuant

A clear movement back above $88,800 would likely return many active investors to profitability, which is often when relief rallies begin.