Institutional appetite for Bitcoin has faded as OTC trades near YTD lows
Institutional appetite for Bitcoin (BTC) has slowly evaporated due to the current bear market situation and is reflected in the significant drop in over-the-counter (OTC) trades, according to an analysis of Glassnode data by CryptoSlate.
A bull run in 2021 saw more institutional players pile into the flagship digital asset, but interest faded as the price plunged to new lows in 2022. Data from three different OTC desks showed that the flow of funds from this group has slowly evaporated.
According to River Financial, an OTC desk acts as a dealer for traders who want to trade a given asset which can be securities, currencies etc. They are usually used when a given trade is impossible on centralized exchanges.
CryptoSlate’s analysis showed that the seven-day moving average of total transfers to OTC desk wallets is now near its 2018 low. OTC trading peaked during the covid 19 pandemic when BTC was trading around $3000.
Since then, the market has witnessed significant peaks through 2021, but slowed down as the year ended. OTC trades in 2022 saw a significant increase in July as investors were still reeling from the collapse of the Terra ecosystem.
Since then, the 7-day moving average for OTC desk inflows has fallen and is now approaching a year-to-date (YTD) low.
The Purpose ETF has seen no activity since early August
The world’s first Bitcoin ETF, the Purpose Spot Bitcoin ETF, has had a fairly quiet year.
CryptoSlate analysis revealed that the ETF had seen no major activity since late July and early August. According to Glassnode 7-day moving average data, the Purpose ETF BTC holdings peaked between June and July 2022.
The Glassnode chart of its inflows and outflows showed that the ETF had experienced large outflows between May and July 2022, coinciding with when BTC’s value fell by 40%. Mainly in July, the Purpose ETF saw its largest outflow week.
It experienced some inflows and outflows in early August, and has had little or no activity since then.
Despite the months of inactivity, the ETF’s holdings remain significantly above their March 2021 launch levels. According to Purpose Invest, the ETF’s assets under management are $396.7 million (23,240 BTC).
