By Mark Ackman
It is more than a couple of weeks since the FTX collapsed. It not only dragged down its own native token “FTX Token – FTT”, but the rest of the cryptocurrency industry.
The collapse has shaken up the entire cryptocurrency market and the situation keeps worsening. However, the recent collapse of the FTX exchange has also changed the behavior of investors.
Investors’ Mindset as Changed
Due to the major crash, people have started to take things into their own hands. They are now taking action and making investments based on their own judgments.
The mindset of investors has changed when it comes to traditional investments in cryptocurrencies. Until the FTX crash, investors were making investments in major and minor cryptocurrencies.
They were going for investments in cryptocurrencies that were promising and had the potential to rise. However, with the recent collapse, the investors are focused on generating gains.
They want to generate profits as soon as possible, which is why they are going for short-investment products.
Short-Investment Products are the New Attraction
In light of the recent events, investors are now more interested to invest in short-investment products. For the time being, they are avoiding making investments in traditional assets.
The traditional assets include Bitcoin, Ether, Litecoin, and many more cryptocurrencies from the crypto market.
The claim made by James Butterfill
James Butterfill, a chief strategy officer (CSO) at CoinShares has made a claim about the investments being made by a majority of the institutional investors.
As per Butterfill, more than 75% of the total inflows generated by institutional investors in the past week went to short investment products.
The majority of these products were siding with the bearish movement of cryptocurrencies. The institutional investors bet on the decline of the cryptocurrency markets over the weekend.
Turns out, they were able to generate gain at the end of the day as the crypto market did face a dip over the weekend.
Throughout the year 2022, the performance of the cryptocurrency market has continued to decline. Things have not been coming in favor of the cryptocurrency industry for almost a year.
Due to the constant dips and downtrends, the institutional investors’ overall AUM has faced a major decline. The institutional investors’ assets under management have continued declining since the start of 2022.
As of now, the total AUM for institutional investors is down to $22 billion. This is the lowest level the AUM has hit in the past couple of years.
It suggests that the cryptocurrency industry has been pushed back into the year 2020 in terms of its valuation and other statistics.
The majority of the short investment products adopted by the investors were for Bitcoin and Ether.
If the institutional investors find the short investment products to be more promising, they may move there permanently. This may cause a major decline in the valuations of the major crypto assets.