Some institutional investors take profits during Bitcoin's pullback

A new report from crypto fund provider CoinShares shows that some institutional investors are taking profits during Bitcoin’s recent consolidation.

CoinShares’ Weekly Digital Asset Flows Report noted that institutional crypto products saw $85 million in outflows over the past week, adding that the data suggests that “some investors continue to take profits following the strong appreciation in BTC’s price.”

The report noted that the rising trade-weighted U.S. dollar index shows that the dollar index “is generally negatively correlated with Bitcoin prices,” which could explain why some investors are taking profits at current levels.

CoinShares also found that Ethereum-derived investment products saw small outflows, with $3 million leaving the market.

Despite some institutional profit-taking, institutional inflows remain strong, with $359 million flowing into crypto investment products this week. Institutions appear to remain single-mindedly focused on Bitcoin, but inflows into Bitcoin products only account for 1% of total inflows this week.

CoinShares noted that inflows into crypto products fell 97% in the three weeks after Christmas and have now returned to pre-Christmas levels. Daily trading volumes are now up more than 450% year-on-year.

Institutional products now account for 6% of total Bitcoin trading volume, down from 14% at the beginning of the month.

Recently, many institutions have shown growing interest in cryptocurrencies, with major global companies recently adding Bitcoin to their asset reserves.

In 2020, the Chicago Mercantile Exchange processed more than 11 million BTC worth of futures trades and announced in December that it plans to launch cash-settled Ethereum futures contracts in early February, pending regulatory approval.

On January 20, Ninepoint Partners submitted a final plan to launch a Bitcoin trust, which met the approval conditions of the Toronto Stock Exchange. (Cointelegraph)