According to data from one of Singapore’s largest banks, a major cryptocurrency selloff in June 2022 has increased institutional investors’ interest in Bitcoin (BTC). The total number of trades on DDEx more than doubled between April and June 2022, owing to investors’ growing appetite for digital assets such as Bitcoin and Ether (ETH). According to DBS, buy orders on DDEx accounted for 90% of all trades in June, as cryptocurrencies traded at significant discounts in mid-2022. According to DBS, the amount of Bitcoin purchased on DDEx in June increased fourfold compared to April 2022, while the amount of ETH increased 65%. With the digital asset industry experiencing unprecedented volatility,” the bank said in a statement. Investors who believe in the long-term prospects of digital assets are gravitating towards trusted and regulated platforms. According to DDEx CEO Lionel Lim, the digital asset industry has experienced a “great reset” as the investment narrative has shifted away from yield-chasing. Instead, investors today are looking for safe havens to trade and store their digital assets amid ongoing market volatility.
As previously reported, June 2022 was the worst month for the Bitcoin price since September 2011, with monthly losses reaching 40% and the BTC price falling below $20,000. The ongoing crypto winter has been largely attributed to the algorithmic stablecoin crisis and the ensuing disaster in cryptocurrency lending as crypto lenders ran out of liquidity. Every participant must recognise the risks involved, as well as the fact that there are no bailouts in the space, so if a borrower fails to repay, a lender must accept their loss. There is no risk-free yield, and the yield is frequently not worth the risks.
Last week, crypto investment products saw minor weekly outflows as volumes fell to their second-lowest levels of the year, indicating weak demand among institutional investors at the end of summer. Outflows from digital asset investment products totaled $8.7 million in the week ending Sunday. Bitcoin (BTC) investment products saw $15.3 million in outflows for the third week in a row. Funds with direct exposure to Solana (SOL) experienced $1.4 million in outflows. Meanwhile, Ether (ETH) and multi-asset investment products saw $2.9 million and $2.7 million in weekly inflows, respectively. Overall, weekly volumes for crypto investment products totaled $1 billion, which is 55% lower than the yearly average.
The majority of the negative sentiment was focused on Bitcoin, which fell last week after being rejected at $25,000. Bitcoin is currently trading around $21,200, which is less than its realised price, or the average price at which BTC’s circulating supply was most recently purchased. Because of cryptocurrency’s strong correlation with traditional equities, the asset class is vulnerable to additional volatility ahead of the Federal Reserve’s annual Jackson Hole Summit in Wyoming later this week. While options traders see little cause for concern, Fed Chair Jerome Powell’s Jackson Hole speech on Friday could reinforce the central bank’s policy expectations for the fall. Because of crypto market volatility, a rocky macro backdrop, and regulatory uncertainty, institutional investors appear to be sitting on the sidelines.