Enterprise crypto products have had a rough start to 2022.
Institutional investors withdrew record amounts of money from crypto investment products last month, according to a report by the Financial Times citing data from crypto analytics firm CryptoCompare.
Outputs averaged $61 million per week in January, making it a tough start for the first quarter of 2022. For comparison, in the first quarter of 2021, the industry saw a record-breaking $4.5 billion in inflows. Grayscale CEO Michael Sonnenshein attributes the decline to the Federal Reserve:
“It is important to note that there is still significant investor demand for digital asset investment products, but institutions have reacted to the Fed, apparently by emptying their positions.”
Analysts expect at least three rate hikes this year, but some are poised to see up to five hikes in early 2023.
Shares of Grayscale Bitcoin Trust (GBTC) fell by a massive 29.8% on Jan. 21, according to data provided by YCharts.
Earlier this week, the SEC delayed its decision on Grayscale’s application after rejecting several offers to launch a spot Bitcoin ETF. Continuing its rally in October due to the launch of the first futures-based ETF, Bitcoin fell 16% in January as the hawk narrative by the Fed pushed risky assets much further. Despite the massive correction, crypto investment vehicles continue to drain funds, suggesting investors are hesitant to buy the dip.
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