Investors showed more interest in short bitcoin funds Last week. The Reason is positive United States economic data and the possibility of the Federal Reserve (Fed) raising interest rates again, reducing risk appetite in financial markets.
According to CoinShares, during the week ending on February 24th, short-bitcoin funds had inflows of $10 million, while long-bitcoin funds saw their third straight weekly outflow, losing $12 million.
Overall investments in digital asset-related goods generally saw small outflows of $2 million.
Investors might adopt a bearish stance on an asset’s price using short funds. The ProShares Short Bitcoin Strategy ETF, for instance, offers short exposure to BTC that profits from drops in the value of the cryptocurrency. A “short” position is essentially a bet on a price decline in the financial markets.
Related Reading | Bitcoin Demand On The Rise, But Slow Compared To Previous Cycles
In its weekly report, CoinShares explained the influx of funds into short-term bitcoin investments:
We believe this reaction reflects nervousness amongst U.S. investors prompted by the recent stronger than expected macro data releases but also highlights its sensitivity to the regulatory crackdown in the U.S.
Bitcoin could not keep its position above a significant resistance mark of $25,000 last week and fell by more than 3%.
Despite the rising deflation rate, Ether, the second-largest cryptocurrency in market capitalization, fell by 2.4%, presumably signaling superior performance compared to other cryptocurrencies.
According to CoinShares, there were minor inflows into Cardano, Solana, and Polygon;
Ethereum has remained relatively insulated from the recent negative sentiment, seeing only $0.2 million of outflows last week.
Bitcoin Outflows Trend
For the third week in a row, Bitcoin experienced a decrease in overall investment, with a total withdrawal of US$12m. Meanwhile, short-bitcoin funds received US$10m, but this trend was only in the United States region.
This response shows anxiety among United States investors, prompted by recent better-than-anticipated macro data releases. This reaction also emphasizes Bitcoin’s vulnerability to the regulatory crackdown occurring in the United States.
It’s worth noting that the recent negative investor sentiment has not significantly impacted Ethereum. Ethereum experienced only US$0.2m in outflow last week. Other cryptocurrencies, such as Polygon, Solana, and Cardano, experienced modest inflows of US$0.6m, US$0.5m, and US$0.4m, respectively.
Even blockchain stocks were not immune to the prevailing negative sentiment, experiencing outflows of US$7.2 million. Since these stocks focus on growth, they are particularly susceptible to fluctuations in interest rate expectations.
The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.