Institutions are bracing for cryptocurrencies following this week's violence, which saw $230 billion wiped off the market and dragged core asset prices to their lowest levels in months.
This is based on the latest reading from the crypto trading and institutional brokerage outfit FalconX, the interest in Bitcoin “remains high” and is trading almost three times more than its rival Ethereum.
“Institutions are buying the bait,” Falcons said in a series of tweets on Tuesday, referring to the buying of Bitcoin and Ethereum after prices began to fall sharply on Sunday. Today we see all investors as net buyers.
These include proprietary trading desks, which represent 57% of total flows on the buy side, followed by hedge funds at 63%, venture funds at 61% and retail investors at 72%, according to tweets.
Crypto investors began selling their holdings in droves on Sunday and Monday amid a broad market sell-off that briefly halted stock trading in Japan and South Korea.
On Monday, the Dow Jones Industrial Average fell 2.6%, the S&P 500 fell 3%, and the Nasdaq Composite fell 3.4%, their worst performance since September 2022.
Those declines were mainly due to disappointing U.S. jobs data and a decline in manufacturing activity, raising fears of a recession.
Cryptos recovered from Monday's lows, with bitcoin recovering 13 percent of its losses to $56,400, CoinGecko data shows.
David Lunt, head of research at FalconX, sees the weekend flood as an opportunity for cryptocurrency institutional investors to add to their market positions.
“The general sentiment among institutional investors is that the outlook for the asset class is very positive over the medium to long term, despite many short-term ups and downs,” Launt said.
The head of research noted that the buy/sell ratio among institutional clusters fell below 50% last week, meaning there were more sellers than buyers in the overall buying flow posted last week.
To put that into context, last week's dip below the 50% threshold stood as one of two outsides for Bitcoin in two months. The other time that happened was around July 1st, in a chart with tweets.
“The numbers above are more than that,” Launt said. “During this correction there was a clear trend of institutions buying dips.”
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