NEW YORK: Institutional investors rushed to crypto products that bet on price declines, posting record inflows, as the collapse of digital asset exchange FTX rippled across the industry and significantly weighed on market sentiment, according to weekly data from digital asset manager CoinShares released on Monday (Nov 21).
Crypto products and funds saw inflows of US$44 million (RM201.3 million), as of the week ended Nov 18, but 75% of those flows represented investments in short crypto products, data showed.
The total assets under management have plunged to US$22 billion, the lowest in two years, CoinShares said.
FTX filed for bankruptcy protection in the United States more than a week ago in the highest-profile crypto implosion to date. Its downfall came after traders withdrew US$6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.
Last week, the executive hired to steer FTX Group through bankruptcy, John Ray, offered his first findings of improper fund transfers and poor accounting at the collapsed crypto exchange, describing it as a “complete failure” of controls.
CoinShares data also showed that bitcoin posted inflows of US$14 million, but when offset by inflows into short investment products, the net flows were a negative US$4.3 million. The AUM on short-bitcoin was at US$173 million, not far from a high of US$186 million,
There were minor outflows of US$800,000 for Ethereum, the second-largest blockchain network. Investors poured in record inflows to short-Ethereum products of US$14 million.
There was a slew of outflows across most altcoins, most notably Solana, XRP, Binance and Polygon.
In another development, cryptocurrency lender Genesis said on Monday it has no plans to file for bankruptcy imminently, days after FTX’s collapse forced it to suspend customer redemptions.
“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing,” the firm said in an emailed statement to Reuters, adding it continues to have conversations with creditors.
A report from Bloomberg News, citing sources, said on Monday that Genesis was struggling to raise fresh cash for its lending unit, and warning investors it may need to file for bankruptcy if it does not find funding.
Last week, Genesis Global Capital suspended customer redemptions in its lending business, citing the sudden failure of FTX.
On Thursday, The Wall Street Journal reported that Genesis had sought an emergency loan of US$1 billion from investors before it suspended withdrawals. – Reuters