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As bad news regarding the FTX bankruptcy continues to emerge in the crypto (and mainstream) media, investors have rushed to bet against bitcoin and the crypto market, with bearish positions hitting two-year highs .

According to the “Digital Asset Fund Flows Weekly Report” by European cryptocurrency investment firm CoinShares, bearish sentiment has gripped the crypto market over the past week to such an extent that short positions accounted for 75 % of all transactions in the market.

This means that the vast majority of institutional investors are betting heavily on the fall of BTC and other cryptocurrencies, such as ETH, which saw the most shorts ($14 million).

Bitcoin (BTC) shorts rose more than 10%

James Butterfill, head of research at CoinShares, said short BTC inflows last week hit $18.4 million, representing a more than 10% week-over-week increase.

The difference between long and short positions in BTC was $4.3 million, which the report says shows that there is still a lot of uncertainty in the market about the future of the price of BTC. BTC.

Bitcoin (BTC) long and short positions, Source: CoinShares
BTC long and short positions, Source: CoinShares

In terms of total assets under management (AuM), the report revealed that total BTC shorts are over $173 million, very close to the all-time high of $186 million.

The collapse of the FTX has caused panic among investors

The CoinShares Report argues that the increase in short entries is primarily due to possible “fallout from the FTX collapse”. In 2022, a handful of big players died at the hands of the brutal crypto market. Celsius, 3AC, Terra and FTX are some of the more infamous examples.

All this growing fear on the part of investors can be reflected in the withdrawal of over $6 million from different altcoins such as Solana, XRP, Polygon and BNB.

According to Bloomberg, between November 6 and November 13, several crypto funds withdrew more than $3.7 billion in Bitcoin (BTC) and $2.5 billion in Ethereum (ETH) from various exchanges following the panic caused by the crash of FTX.

Crypto outflows since the start of the FTX collapse, Source: Bloomberg
Crypto outflows since the start of the FTX collapse, Source: Bloomberg

Additionally, more than $2 billion worth of altcoins have been withdrawn during the same period, according to reports from CryptoQuant, a crypto analytics firm that tracks data from major crypto exchanges.

Market actions follow what appears to be market sentiment. The Crypto Fear and Greed Index shows that right now traders are in a state of “extreme fear”, touching 22 points on a scale from 0 to 100, with zero being a theoretical stage of absolute panic where no one is ready to invest in an asset and 100 is an absolute greed stage where no one is willing to sell their assets.


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