Record outflow of Canada’s largest Bitcoin fund drops BTC reserves by 50%


The Canadian Bitcoin Fund operated by 3iQ Corp has witnessed a sharp decline in its BTC reserves since June.

Literally means Bitcoin Fund (QBTC:CN) Is a closed-end investment product, holding about 24,000 BTC in its vault at the beginning of June. However, as the monthly meeting progressed, the reserve first fell below 16,000 BTC in a dramatic plummeting manner.

According to on-chain data from South Korean analysis company CryptoQuant, another large-scale divestment later pushed the Bitcoin fund’s BTC reserves to around 13,000 BTC.

QBTC and GBTC Bitcoin reserves (red) and BTC price (black). Source: CryptoQuant

However, the withdrawal of the QBTC fund in June coincided with a surge in inflows from the 3iQ Exchange Traded Fund (ETF), the 3iQ CoinShares Bitcoin ETF (BTCQ). Specifically, Canadian ETFs attracted an inflow of 2,088 BTC in June 2021, while QBTC attracted an outflow of 10,432 BTC in the same month.

ByteTree CIO Charlie Morris pointed out that 3iQ allows its customers to convert their QBTC units to the 3iQ CoinShares Bitcoin ETF. He added that the growth of crypto ETFs on major stock exchanges-allowing redemptions and withdrawals-has prompted investors to reduce their exposure to closed-end funds.

Nonetheless, Bitcoin has less risk exposure

In contrast, New York-based Grayscale Bitcoin Trust (GBTC), 3iQ’s biggest competitor, has not seen a decline in its BTC reserves. Grayscale Investments has closed GBTC for “administrative purposes” since February. Closed-end funds do not allow redemptions and withdrawals.

In addition, the data collected by ByteTree Asset Management display The 90-day inflow of Bitcoin funds into the United States and Canada has dropped from 191,846 BTC in January 2021 to 12,794 BTC, a decrease of 93.3%.

The Bitcoin Fund’s BTC reserves fell by 93.3%.Source: byte tree

Although the 3iQ CoinShares Bitcoin ETF (BTCQ) attracted 2,088 BTC in June 2021, it has so far experienced an outflow of 354 BTC in July 2021.

Fund reserves reflect the rise and fall of institutional interest in Bitcoin. This is mainly because these investment products often provide qualified investors with indirect access to the crypto market through the issuance of stocks backed by real bitcoins in the vault.

Closed-end funds trading at a negative premium did not see a large amount of capital inflows/outflows in July.Source: byte tree

Therefore, as the fund’s Bitcoin reserves decline on average, this usually indicates that institutional investors have lower demand for cryptocurrencies.

Fed perspective

Institutional investors’ reduced exposure to Bitcoin funds coincides with the Fed Hawk Signal At the Federal Open Market Committee meeting at the end of June.

Specifically, the U.S. central bank said in mid-June that it might raise interest rates before the end of 2023 to curb current inflationary pressures. It mentioned the U.S. Consumer Price Index (CPI), which measures inflation, which surged by 0.6% in May 2021 to a three-year high of 4.5%; in June, the CPI climbed again by 0.9% to 5.4%, which is the last 13 years. The fastest growth rate.

The index of all items excluding food and energy rose 0.9% in June after rising 0.7% in May.Source: US Bureau of Labor Statistics

Since the Fed’s outlook, Bitcoin has fallen below $32,000. However, flagship cryptocurrencies mostly stay in the price range of $30,000-34,000, which shows that retail and institutional investors have mixed views on the next deviation of cryptocurrencies.

Despite the popular belief that Bitcoin is the ultimate advantage against rising consumer prices, conflicts of prejudice have emerged. The record goes like this: Unlike the U.S. dollar or other fiat currencies, Bitcoin has a limited supply of 21 million tokens, which makes it more scarce than an inflation currency, which, in turn, is more valuable in the long run.

But Bitcoin has reacted negatively to rising inflation in the first few months, prompting critics to question its safe-haven claims, at least in the short term. For example, “Fortune” magazine specifically reported on Bitcoin’s unstable response to rising consumer prices, saying that the cryptocurrency is now “walking towards its own drummer.”

Since reaching around $65,000 in mid-April, Bitcoin has fallen by more than 50%. Source: TradingView

Eric Diton, President and Managing Director of The Wealth Alliance, pointed out that Bitcoin has become an overvalued asset after rising from below $4,000 to a record $65,000 in the past year. However, depending on the level of development of cryptocurrency, its price must be corrected before it continues to rise.

Nevertheless, Bank of America’s investigation of fund managers also Established “Long Bitcoin” is one of their most crowded transactions, along with long ESG and long commodities.

As Cointelegraph ReportDue to their potential impact on the cryptocurrency market, traders are now paying close attention to the last major unlock date in the coming days and weeks.

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