The crypto market has recently hit the brakes, reverting to activity levels reminiscent of three years ago. The pervasive bear market has affected casual traders and instilled hesitation among institutional investors. Recent data indicates that these institutions are now witnessing steady capital outflows.
Centralized Exchange Volumes: A Deeper Dive
The daily volumes on centralized exchange platforms (CEX) mirror those seen towards the end of 2020. Additionally, there’s been a noticeable reduction in crypto derivatives regarding open interest and overall activity.
Crypto researcher Aylo portrays the current crypto markets as eerily silent, reminiscent of a ghost town. He mentioned, “A majority seems to have capitulated, with a vow of non-return.” However, it’s vital to note that the crypto world experienced a similar atmosphere during the harrowing 2018-19 bear market. Aylo posits that such phases have historically signaled an “opportunity zone,” where wise acquisitions often lead to impressive returns when activity and interest are at their lowest.
Chainlink’s community leader, known as “Chainlinkgod,” chimed in with a similar sentiment. They emphasized the absence of fresh capital inflows into the crypto sphere. He stated, “Retail investors are feeling the brunt, and institutions are on the sidelines awaiting clearer regulations.” He expressed his vision and added, “In my perspective, the next significant influx of capital into the crypto economy is likely to come from institutions.”
Institutional Perspective on Tokenized Assets
Institutions have consistently highlighted the potential advantages of tokenized assets. They believe in the immense market opportunity such assets can offer. Financial giants like BlackRock and Grayscale might be the torchbearers leading us to the next bull market. However, current market dynamics showcase significantly reduced activity levels on every exchange platform.
Will Clemente weighed in on the situation, suggesting a plausible scenario where BTC could retest lows akin to Q1 2020.
As per CoinShares’ report from September 4, digital asset investment products are declining, with outflows at a modest $11.2 million. Over the past seven weeks, this negative sentiment has amounted to a considerable $342 million. Interestingly, Bitcoin funds recorded inflows of $3.8 million, whereas short BTC funds experienced outflows for the 19th successive week, totaling $3.3 million.
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