Institutional Appetite for Bitcoin Evaporates as OTC Transactions Approach Year-to-Date Low

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The institutional appetite for Bitcoin (BTC) has slowly evaporated due to the current bear market situation and is reflected in the significant drop in over-the-counter (OTC) trading, according to an analysis of Glassnode data by CryptoSlate.

A bull run in 2021 saw several institutional players crowd into the flagship digital asset, but that interest faded as the price fell to new lows in 2022. Data from three different OTC desks showed that the Fund flow from this group slowly evaporated.

According to River Financial, an OTC desk acts as a broker for traders looking to trade a given asset which could be securities, currencies, etc. They are generally used when a given transaction is impossible on centralized exchanges.

CryptoSlate analysis has shown that the seven-day moving average of total transfers to OTC desktop wallets is now near 2018 lows. OTC transactions peaked during the covid 19 pandemic when BTC was trading at around $3000.

Source: Glassnode

Since then, the market saw considerable spikes throughout 2021, but slowed down at the end of the year. OTC transactions in 2022 saw a significant spike in July as investors were still reeling from the collapse of the Terra ecosystem.

Since then, the 7-day moving average for OTC desktop entries has fallen and is now approaching a year-to-date low (YTD).

Purpose ETF has seen no activity since early August

The world’s first Bitcoin ETF, Purpose Spot Bitcoin ETF, had a rather quiet year.

Analysis by CryptoSlate revealed that the ETF had not seen any major activity since late July and early August. According to data from Glassnode on its 7-day moving average, Purpose ETF BTC holdings peaked between June and July 2022.

Source: Glassnode

The Glassnode chart on its inflows and outflows showed that the ETF saw strong outflows between May and July 2022, coinciding with when BTC’s value fell by 40%. Mainly in July, Purpose ETF saw its biggest wick of outflows.

Source: Glassnode

It saw inflows and outflows in early August and has seen little to no activity since then.

Despite months of inactivity, ETF holdings are still significantly above March 2021 levels when it launched. According to Purpose Invest, the ETF’s assets under management are $396.7 million (23,240 BTC).

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