Bitcoin [BTC]: Short products for profit as investors avoid long positions

  • Investors then funnel money into Short BTC products fourth consecutive week of outflow
  • With the Shanghai Upgrade coming soon, investors will be cautious about ETH

Into a new one reportdigital asset investment company CoinShares found that ongoing investor concerns about the uncertain regulatory landscape of crypto assets led to a fourth consecutive week of outflows for Bitcoin [BTC]. This is because investors rallied for short investment products instead.

The value of BTC fell sharply in the early trading hours of March 3, further reducing investor confidence in the near-term price rally of the coin due to the uncertainty surrounding Silvergate Capital. This event contributed to protracted liquidations rising to a seven-month high, data from Mint glass revealed. According to CoinShares,

“The poor sentiment likely reflects investors’ continued concerns about regulatory uncertainty for the asset class.”

Source: CoinShares

Too short or not too short?

Investors funneled money into Short Bitcoin products last week, according to CoinShares. As a result, Short-Bitcoin saw $1.8 million inflows. On a year-over-year basis, Short-Bitcoin products have recorded $50 million in inflows.

Interestingly, despite recent inflows into Short Bitcoin, the value of total assets under management (AuM) has only increased by 4.2% TYD. This was in stark contrast to Long-Bitcoin AuM, which is up 36%.

Citing concerns about regulatory uncertainty for the asset class, CoinShares added that the discrepancy in performance suggested that short positions are not yet delivering the returns some investors expect.

Source: CoinShares

For its part, Bitcoin recorded its fourth straight week of outflows totaling $20 million. Due to the coin’s impressive performance early in the year, YTD inflows totaled $126 million.

While the entire investment products market experienced low volumes last week due to outflows, BTC experienced lower-than-normal market volume, CoinShares found. According to the report,

“Investment product volumes were low at US$844 million for the week, but a similar situation was seen for the entire Bitcoin market volumes, averaging US$57 billion, 15% lower than normal.”

Overall, the low investment product volumes and lower-than-usual BTC market volumes suggested that investors have been cautious and may take a wait-and-see approach.

Small inflow in Ether ahead of the Shanghai upgrade

There was a small inflow into altcoins last week, with Ethereum [ETH] and Solana [SOL] received $700,000 and $340,000 respectively. On the other hand, Binance’s BNB and Cosmos’ ATOM recorded outflows of $380,000 and $210,000 respectively.

Investors have exercised caution as the date for Ethereum’s Shanghai Upgrade approaches. There is a general sense of uncertainty about the direction of ETH’s price after previously locked ETH coins become available.

Source: CoinShares

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