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Institutional appetite for Bitcoin is dwindling

Photo of: Joseph Stone
by Joseph Stone
bitcoin institution

Institutional demand for Bitcoin is reportedly slowing down. This was the driving force behind the growth of the BTC price. But the data is contradictory.

Bitcoin and institutional investors are at odds? The arrival on the market of these investors was one of the main levers of the rise of Bitcoin since the beginning of the year. But now the crisis has come and gone.

As a result, investment in BTC products is down. The latest CoinShares report highlighted this recently. However, Ethereum suffered the most from institutional disaffection last week.

Bitcoin, meanwhile, is heading towards some form of stabilization. A week earlier, outflows from BTC investment products reached $1.3 million. While the balance sheet is still negative, it is improving.

A week earlier, these outflows exploded to $89 million. However, institutional demand is still low. However, it is an essential lever and catalyst for the Bitcoin price.

But according to Glassnode’s report, institutional investors are increasingly disinterested in the leading cryptocurrency by market capitalization. One indicator of this disavowal is the activity on the Grayscale Bitcoin Trust.

The financial instrument of choice for institutional investors, GBTC now offers its shares at a discount. Clearly, the Trust’s shares are now more affordable than buying Bitcoin directly.

Until now, investors had to pay a premium to gain exposure to Bitcoin and acquire GBTC shares. But since February, the trend has reversed. And it has become even more pronounced thereafter.

The “GBTC product has reversed to trade at a persistent discount to NAV, reaching the most significant discount of -21.23% in mid-May,” Glassnode says.

But there are also other indicators of institutional interest to consider. In particular, investors are divesting from two popular ETFs (exchange traded funds).

The combined net flows for both Purpose and 3iQ ETFs were falling last month, with 8,037 fewer BTC. But for 3iQ’s CEO, interviewed by Decrypt, there’s no need to worry, however. Investors have simply taken their gains.

“There’s no slowdown at all,” he assures, reporting discussions with hundreds of potential customers over the past two weeks. “The demand we’re getting is still real and significant,” he tells our colleagues.