Large professional investors are in no hurry to sell Bitcoin despite the volatility of the cryptocurrency market
Since the beginning of this summer, the crypto market has been under constant rate jumps. Bitcoin trading has been accompanied by sudden bursts of volatility, causing the price of the main cryptocurrency to change quickly and be in a downtrend. Be that as it may, BTC continues to attract the attention of major players, in addition experienced investors remain confident in betting on Bitcoin-ETF investments. According to experts, the combination of factors demonstrating the market’s stability in the face of another correction may speak of the beginning of a new stage of the global bullrun.
At the end of Tuesday, spot Bitcoin-ETFs in the United States once again issued a net inflow of capital. The figure totalled $87.6 million, indicating investors’ attention to such instruments.
Capital inflows and outflows from spot Bitcoin-ETFs in the US
The iShares Bitcoin Trust ETF from BlackRock, the world’s largest investment company, attracted the most funds at $55.4 million. In second place was the instrument under the ticker ARKB from ARK Invest with the result of 51.9 million.
At the same time, GBTC from Grayscale became the leader in capital outflow by tradition. 12.8 million dollars were withdrawn from it, while the total outflow since its launch on 11 January 2024 reached 19.65 billion.
Who is investing in Bitcoin?
Bitwise’s head of European research, Andre Dragosz, described the current market situation in a nutshell in an interview with The Block journalists. Here is his rejoinder to the current situation.
Institutional investors are not running away from Bitcoin’s increased volatility. They remain fairly stable and tend to hold onto their investments.
Obviously, the key to this confidence lies in allocating a predetermined portion of their own portfolio. Still, experienced players conduct a thorough research of a particular asset before investing in it. Well, one of the features of BTC in the face of high volatility is not new, so such jumps in the cryptocurrency rate do not surprise investors.
Bitcoin (BTC) hourly rate chart
Dragosz mentioned data from recent institutional reports on Form 13F for the second quarter of 2024, which confirmed the fact of investing in shares of spot exchange-traded funds on BTC along the lines of banking giants Goldman Sachs and Morgan Stanley.
According to the expert, they show the commitment of institutional investors to invest in Bitcoin-based ETFs. Moreover, this trend is so large that the volumes are not comparable to investments in similar instruments based on traditional assets. He continues.
Of the institutional investors who invested in spot Bitcoin ETFs in the first quarter of this year, most either already held more shares this spring or invested additional capital. Of those who signed up in the first quarter, 44 per cent upgraded, 22 per cent left unchanged, 21 per cent downgraded and 13 per cent sold their ETF holdings entirely in the second quarter. When you compare this result to other exchange traded funds, it’s really good.
Approval of spot cryptocurrency ETFs in the US
A fresh report from analysts at Wintermute confirms what Dragosh said. Here’s a line from the document.
Despite Bitcoin’s price falling more than 20 per cent in the second quarter, the big players did not waver and continued to accumulate the crypto. This fact once again underlines the growing acceptance of BTC as an investment asset.
More than 60 per cent of hedge funds own at least a minimum number of shares of Bitcoin-based exchange-traded funds. Hedge funds have become major players in the sphere since the listing of spot Bitcoin-ETFs earlier this year.
Cryptocurrency buying by investors
Large hedge funds like Millennium, Schonfeld, Boothbay, Capula and others hold shares of most Bitcoin-based ETFs. But there are also many family offices and financial advisers who recommend exchange-traded funds for their clients to buy.
A report published Tuesday by analysts at QCP Capital noted that traders trading derivatives based on the major cryptocurrency are showing increased interest in Bitcoin put options with expiry dates closer to the time of the U.S. presidential election in November.
This suggests that in this way they can hedge against increased market volatility or a potential correction, i.e. reduce the likelihood of such risks to their own investments.
Cryptocurrency market growth
In addition, QCP Capital experts noticed a significant difference in the expected volatility of options expiring before the election and options with expiry after the election. The gap between the two is quite significant – here’s a rejoinder on the subject.
In the run-up to the US election, a skew in the ratio of put and call options has developed in favour of puts, and the volatility spread between expiry dates before and after the election is 6 points.
Implied volatility of Bitcoin options
The main favourite in the presidential race is Donald Trump from the US Republican Party. He promises to establish government relations with cryptocurrency companies, as well as to work on the creation of a national crypto reserve.
But his opponent Kamala Harris, who is almost evenly matched in terms of chances of victory, avoids the topic of crypto altogether. Given this peculiarity, her possible victory is perceived by investors as bad news for the market.
It seems that professionals in the investment market are not particularly worried about what is happening in the market of digital assets. First of all, they must have been prepared for such a thing, because they have conducted relevant research on BTC. In addition to that, capital holders are waiting for the improvement of conditions in the economy as the U.S. Federal Reserve Board lowers the base interest rate and the American presidential election is approaching.
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For more interesting stuff, check out our Future Rich cryptocurrency chat. In it, we closely follow the current bullrun and try to capitalise on it as much as possible.
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