tl;dr
Following a significant market downturn resulting in a $230 billion loss, institutional interest in Bitcoin remains high, with significant buying activity observed. Various investor personas, including proprietary trading desks, hedge funds, venture funds, and retail aggregators, are reported to be ...
Crypto market experiences significant drop, with institutions buying the dip - Institutional investors see opportunity in market correction, positive outlook for crypto
Following a significant market downturn resulting in a $230 billion loss, institutional interest in Bitcoin remains high, with significant buying activity observed. Various investor personas, including proprietary trading desks, hedge funds, venture funds, and retail aggregators, are reported to be net buyers. Despite the recent market volatility, institutional investors view the long-term outlook for cryptocurrencies positively and saw the dip as an opportunity to increase their positions. The recovery of Bitcoin by 13% from its Monday lows is also noted. Institutions have been scooping up crypto following this week's rout, which wiped some $230 billion from the market and dragged major asset prices to lows not seen in months. That's according to the latest reading from crypto trading and institutional brokerage outfit FalconX, which noted interest in Bitcoin "remains elevated" and is trading almost three times more than rival Ethereum.
"Institutions are buying the dip," FalconX said in a series of tweets on Tuesday, referring to the purchasing of Bitcoin and Ethereum after prices began to fall heavily on Sunday. "We saw pretty much all investor personas as net buyers today." Those include proprietary trading desks, representing 57% of total flows on the buy side, hedge funds at 63%, venture funds at 61%, and retail aggregators at 72%, per the tweets. Crypto investors began selling off their assets en masse on Sunday and Monday amid a broader market sell-off, which saw stock trading briefly halted in Japan and South Korea. On Monday, the Dow Jones Industrial Average fell by 2.6%, the S&P 500 dropped by 3%, and the Nasdaq Composite decreased by 3.4%, marking their worst performance since September 2022. Those declines were mainly due to disappointing U.S. jobs data and reduced manufacturing activity, which intensified fears of a recession .
Crypto has since recovered from its Monday lows, with Bitcoin clawing back 13% of its losses to $56,400, CoinGecko data shows. David Lawant, head of research at FalconX, told Decrypt institutional investors saw the weekend dip as an opportunity to add to their market positions. "The overall mood among institutional investors is that, despite the many short-term crosscurrents, the outlook for the asset class remains very positive in the medium and long terms," Lawant said. The research head pointed to last week's buy/sell ratios among institutional cohorts, which had sunk below 50%, meaning there were more sellers than buyers based on the total buying flow as a percentage of total flows posted in previous weeks. To put that into context, last week's dip below the 50% threshold stood as one of two outliers for Bitcoin over an almost two-month period. The other period where that occurred was around July 1, per a chart accompanying the tweets.
"The numbers today are way above that," Lawant said. "Institutions buying the dip has been a clear trend during this correction."