Smart money is getting shorter as macros cast gloom on crypto

Digital assets are a relatively new asset class that made smart money investors fall in love with high gains during the 2021 bull market.

Traditional financial institutions such as venture capital firms then poured billions in the crypto market, which boosts the development of certain protocols and projects.

However, the bear market of 2022 dealt a heavy blow to the pockets of smart money investors. Some companies even froze investing in crypto startups.

Coin shares data gives a clearer picture of how smart money feels about crypto – and all is not looking rosy for the crypto market as a whole this year.

Institutions Short As Macro Data Strengthens Bears

According to the report, digital asset investment products had an average weekly outflow of $2 million. This number may be relatively small, but this supposedly smaller outflow masks the broader bearish sentiment in the market.

Companies issuing cryptocurrency-based investment products saw large outflows of nearly $7 million.

Sorted by asset, Bitcoin saw the largest outflow from smart money. With a total of $12 million a week and $17 million a month, it leads that metric by a huge margin.

Ethereum, on the other hand, experienced only $200,000 outflows a week with the monthly outflow at just $1.6 million.

Short products have been a popular choice for institutional investors. Short-Bitcoin is up nearly $10 million in inflows, showing that investors are incredibly bearish on the long-term for Bitcoin and the crypto market as a whole.

CoinShares notes that this shows the sensitivity of institutional investors regulatory actions on crypto. Add to that the fact that the macros are not exactly bullish as of now.

What is smart money?

Smart money is a term used to describe investments made by individuals or institutions with significant knowledge, experience and resources in a particular industry or market.

These investors usually have access to valuable information and use their expertise to identify and exploit opportunities that the general public may not be aware of.

Smart money investors are often well connected and may have access to inside information or expert analysis that can help them make informed investment decisions.

As a result, their investments tend to be more successful and profitable than those made by the average investor.

In some cases, smart money investors may also provide financial backing or support to promising startups or innovative businesses that they believe have significant growth potential.

Crypto’s growing popularity

Meanwhile, the growing popularity of crypto has many countries competing for the top spot for its adoption. Recently research shows that other markets such as Hong Kong and Brazil are showing promise in terms of crypto adoption.

With crypto debit and credit cards already in the market, the future of crypto remains bright despite the current headwinds it faces.

Crypto total market cap at $1 trillion on the weekend chart | Chart: TradingView.com

These markets also support the use of cryptocurrencies, with research estimating that the space could attract 1.5 billion users even with conservative adoption rates.

Moving forward, institutional investors may also flock back to digital assets as the macroeconomic situation improves.

At the time of writing, Bitcoin was trading at $23,776, down 2.6% over the past seven days, data from Coingecko shows.

– Featured image from Reaction.Life