FTX crisis leads to record inflows into short-investment products
Institutional investors have responded to the negative sentiment caused by FTX’s collapse, with record institutional inflows into crypto-focused short-investment products.
According to CoinShares’ chief strategy officer James Butterfill, 75% of the total inflows by institutional crypto investors for the week ending Nov. 18 were placed in short investment products — essentially a bet that crypto prices will decline.
Butterfill said the takeup of short positions by investors is likely “a direct result of the ongoing fallout from the FTX collapse,” while the total assets under management (AUM) for institutional investors is now at $22 billion — the lowest in two years.
Over the week, $14 million was poured into short-ETH investment products. CoinShares said it was “the largest weekly inflow on record.”
CoinShares cited “renewed uncertainty” over Ethereum’s Shanghai upgrade slated for Sep. 2023 and mentioned that the sizeable amount of ETH held by the FTX exploiter as possible reasons for the negative sentiment.
Inflows into short investment products for Bitcoin (BTC) hit $18.4 million. Bitcoin short products were reported to have an AUM of $173 million coming close to the $186 million high.
Investors are also seemingly dropping altcoins with Solana (SOL), XRP (XRP), BNB (BNB), and Polygon (MATIC) product outflows totaling $6 million.
The newly reported inflows are a slight change from the week prior which saw the largest inflows in 14 weeks to crypto products totaling $42 million, although short Bitcoin products already started to see inflows of $12.6 million and blockchain equity products recorded the largest weekly outflow since May 2022.
Related: FTX will be the last giant to fall this cycle: Hedge fund co-founder
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