Bitcoin [BTC] bears keep faith as short funds see $10M inflow: Report

In a new one reportinvestment firm CoinShares found that the negative sentiment lingering in the digital asset market culminated in a third consecutive week of outflows for Bitcoin [BTC] as investors shifted their attention to short investment products last week.

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After a sustained rise in cryptocurrency prices at the beginning of the year, the market has moved sideways in the past month. This has caused several investors to sell their holdings to protect themselves against significant price falls. Negative sentiment has resurfaced, resulting in BTC experiencing three consecutive weeks of outflows, with $12 million withdrawn.

Coinshares said,

“This negative sentiment was entirely from the United States.”

It further added:

“We believe this reaction reflects nervousness among US investors following the recent stronger-than-expected macro data, but also highlights its sensitivity to the regulatory crackdown in the US.”

Source: Coinshares

Short BTC products are the ultimate winners

According to Coinshares, last week, investors funneled funds into Short-Bitcoin products. As a result, Short-Bitcoin saw inflows of $10 million last week, bringing total inflows for February to $14 million. So far this year, Short-Bitcoin products have logged inflows of $48 million.

A “short” position in the financial markets refers to a bet that the price of a particular asset will fall. According to the report, the fact that the largest inflows recorded last week for short investment products reflected the general frenzy of US investors who expect BTC’s price to fall further if the Federal Reserve remains hawkish in its approach.

Coin shares noted:

“Opinions remain polarized, however, with the US seeing outflows totaling $14m, with recent macro data raising fears among investors that the US Federal Reserve (FED) will be more hawkish than expected.”

Source: Coinshares

Ether and other alters?

Per Coinshares, while the general market suffered outflows totaling $2 million last week, Ethereum [ETH] remained largely unaffected by negative market sentiment, with only $200,000 withdrawn.

On the other hand, less inflow was seen in Polygon [MATIC]Solana [SOL]and Cardano [ADA]with a total of $600 million, $500 million and $400 million, respectively.

Source: Coinshares

Read Bitcoins [BTC] Price prediction 2023-24

Furthermore, the negative sentiment also affected blockchain stocks, resulting in outflows of $7.2 million.

While noting that these companies are largely focused on growth, Coinshares stated that they were susceptible to changes in interest rate expectations and therefore remained vulnerable.