Cryptocurrency ETFs Moves to Save Market Volatility, Sun Clears the Air
The global financial market experienced intense volatility on Monday, August 6, and major cryptocurrency assets like Bitcoin and Ethereum responded with a significant drop. Bitcoin dropped to $55,000, while Ethereum dipped to $2,200. The situation also gave rise to massive liquidations worth over a billion dollars.
Traditional Exchange Traded Funds (ETF) operators have linked the cause of the volatility to the arrival of new sets of institutional investors. The Head of Research at Bitcoin and Ethereum ETF service provider Bitwise, Ryan Rasmussen, speaking to journalists at Decrypt, revealed that ETFs play a major role in reducing market volatility by attracting new investors into the market, thereby adding more liquidity to the market.
Ryan noted that Bitwise’s spot cryptocurrency Exchange Traded Products (ETPs) attracted over a million dollars worth of investment in net inflow. He added that demands from most investors are assisting in offsetting the selling pressure. It is believed that ETF investors harbor a more long-term temperament and have effectively ignored the ‘buy-and-hold’ method for a long time.
IBIT Market Performance Proves Market Recovery, Institutional Investor’s Strategy Hailed
Many investors may witness a crash in the market and may see it as an opportunity to buy up some assets instead of expressing panic. This method is opposed by day traders who share a different opinion with institutional investors, who are the main proponents of this concept.
Chairman and Executive Director at OSL, a Hong Kong-based ETF custodian Patrick Pan, commented that institutional investors have always had a longer investment pattern, more strategic investment decisions, and stronger risk tolerance rates than the rest of the market players. Pan also added that the movement towards institutional investments has given birth to a more stable cryptocurrency ETF market.
The proof of the stabilizing effect is evident in the iShares Bitcoin Trust (IBIT) ‘s latest market performance, which had neutral net flows after dropping by 14% during the weekend. The previous performance of the United States Ethereum ETF has also been marked as evidence of market recovery, having posted its second-biggest daily inflow in July.
Institutional Investors Linked to Faster Market Recovery
IBIT investors woke up on Monday to an 8% drop in market flow last week but have maintained absolute calm afterward. Pan also explained that the increase in the number of institutional investors produces more capital flow for the market, hence avoiding impending harm that could have greeted the market.
He also said that the more these institutional investors enter the market, the more mature and less volatile it becomes. With the continuous capital input into the market, major cryptocurrency assets have managed to bounce back, with Ethereum and Bitcoin experiencing a 4% increase within 24 hours.
Reacting to this, Pan warned that the recovery process won’t be “all shades of rainbows and sunshine.” Institutional investors are sticking to all rules of risk management, a sign that they’re repositioning their investment portfolios monthly, quarterly, and annually.
Justin Sun Clears Rumors of Large Bitcoin Liquidation
Meanwhile, as the price of Ethereum continues to drop and is currently trading below $2000, reports from random sources say the cryptocurrency entrepreneur and billionaire Justin Sun has liquidated over $200 million in leverage long-term position. Sun, on Monday, made a public statement about this development, clearing the air that his team at Tron doesn’t use leverage patterns of trading.
He went ahead to describe such news as a mere rumor. The price of Ethereum has displayed a strong sign of recovery as the fear of the United States recession continues to compel individuals’ decisions to invest in cryptocurrency.
This is linked to the strong Purchasing Managers’ Index (PMI) data, which is also geared at increasing the number of employment opportunities. However, as of press time, Ethereum is trading at over $2,436.57, with a market capitalization of more than $300 billion, after recording a trading volume of $35,301,043,770.
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