Bitcoin Bears Gain Ground as Short Funds See Record Inflows

Investors are increasingly betting against bitcoin as the cryptocurrency struggles to recover from a month-long slump.

According to a report by crypto asset manager CoinShares, short-bitcoin funds — which profit from a decline in bitcoin’s price — had $10 million in inflows during the week ended Feb. 24. This is the highest weekly inflow on record for such funds.

Meanwhile, long-bitcoin funds — which benefit from a rise in bitcoin’s price — saw $12 million in outflows, marking the third consecutive week of net redemptions. The data suggests that some investors are losing confidence in bitcoin’s bullish prospects and are seeking to hedge or profit from its downside.

Bitcoin has fallen by 20% this month, from a high of $28,800 on Feb. 1 to a low of $23,000 at press time. The cryptocurrency has faced several headwinds, including regulatory uncertainty, environmental concerns, technical glitches and competition from other digital assets.

Some analysts have also warned that bitcoin’s rally may have been overextended and due for a correction. Bitcoin surged by more than 300% in 2022, reaching an all-time high of $41,940 on Jan. 8.

However, not everyone is bearish on bitcoin. Some investors and experts believe that the cryptocurrency still has room to grow in the long term, driven by institutional adoption, innovation and scarcity.

CoinShares also reported that total assets under management (AUM) for crypto investment products reached $44 billion as of Feb. 24, up from $37.6 billion at the end of January. Bitcoin accounted for 78% of the total AUM, followed by ethereum with 17%.

The report also noted that crypto exchange-traded products (ETPs) saw strong trading volumes in February, averaging $936 million per day.