Bitcoin’s recent selling spree has a new feel.
This time, instead of crypto-stress signals like panicked small investors or a wave forced liquidation, or even miners selling coins to pay their bills, the pressure appears more as portfolio management by institutional institutions.
Professional allocators reduce risk as US interest rate expectations fluctuate and asset volatility rises.
This scenario treats Bitcoin less as a standalone “crypto-story” and more as a macrotrade that is trimmed when the markets become defensive.
Institutional de-risking, not retail panic
Many analysts claim that institutional derisking is the “unexpected” source of sales.
Markus Thielen, 10x Research’s senior analyst has pointed out the same scenario repeatedly: high real yields combined with sticky inflation make non-yielding investments like Bitcoin less attractive.
When funds are needed to reduce risk, they will sell the items that can be sold quickly.
Bitcoin, in this framework, is not being rejected. It’s just being managed. Bitcoin can be cut to manage risk when bond prices suddenly rise or equities start to wobble.
You can find echoes in the data on flows.
CoinShares reported a $1.7 billion loss in digital assets for the week ending February 2. Bitcoin and Ethereum were the main culprits.
CoinShares reported that the change was due to a decline in investor sentiment, which shifted year-to date flows into negative territory and resulted in a sharp reduction of assets under management from previous highs.
This is important because selling ETFs or institutional vehicles may be mechanical. Funds are forced to sell regardless of the mood on “crypto Twitter”.
The pressure is persistent because of this.
Capitulation in the retail sector is often a fast-moving process. The institutional risk-control sales tend to be in waves, as managers reduce leverage and reach internal limits.
The importance of macro signals is now greater than Bitcoin headlines
Standard Chartered’s Geoff Kendrick was explicit in his statement that Bitcoin’s macro sensitivity has returned.
Kendrick, in a letter cited by several outlets, warned that Bitcoin might test $50,000 before it stabilizes. The bank also cut its forecast for year-end 2020 to $100,000, down from $150,000.
Bank of America attributed the downgrades to the worsening macroeconomic conditions, a weaker appetite for risk, ETF withdrawals and diminishing hopes that Fed will cut rates in near future.
Bloomberg also described the action as an “orderly decline” that looked more like a cross-assets repositioning rather than a disorderly lever blowup.
James Butterfill, of CoinShares, has also linked outflows with macro-events.
Butterfill, in a CoinShares article that was widely quoted, described the large number of weekly redemptions by citing dwindling hopes for rate cuts, negative price trends and frustration at digital assets not benefiting from broader “debasement trading.”
This is the simple macro feedback loop: If investors believe rates will remain higher, they reduce their exposure to assets which rely on risk appetite and liquidity, such as Bitcoin.
The post Bitcoin selling pressure is coming from an unexpected source could be updated as new information unfolds.
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