Institutional investors continue to get rid of Bitcoin
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During the last one and a half months, funds specializing in digital currencies have recorded a reduction in investments. Over the past week, their volume reached $39 million, and in 6 weeks it amounted to $200 million, LBLV reports. Investors are most actively selling Bitcoin, and the United States accounts for the largest share of such transactions.
The regulatory authorities still refuse to approve the proposed ETF, which will deal with spot Bitcoin. Only futures funds with the world’s first digital currency are allowed. The largest such structure in the United States today is ProShares Bitcoin Strategy. It is this fund that records the strongest investment outflow.
The currently observed trend is partially due to the peculiarities of the futures operation. As the contracts expire, the fund makes new acquisitions, but trade between them is carried out with a difference. Currently, the value of contracts in the framework of which deliveries are carried out later is higher than that of those that expire earlier.
The attractiveness of investments in Bitcoin decreases due to contango futures
Now, when switching between contracts, the fund buys a new one at a higher price, which leads to financial losses. Due to such a “contango leak”, investments using ETFs have lost 14% to Bitcoin since the first days of 2023.
Because of the “bearish” trend observed for most of the last year, BITO was inferior to Bitcoin by only 1.8%, which is an acceptable difference. But after digital currencies began to rise in price again, contango grew, and the income of market players decreased.
Experts warn that with a high degree of probability, the problem of high contango will remain in force, as the increase in the value of digital assets will most likely continue. At the same time, as noted by LBLV, the attractiveness of long-term investments in Bitcoin with the help of ETFs on futures contracts continues to decrease.
Yaroslav Kravtsov, financial analyst at LBLV
Source: Ministry of Finance
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