Institutional investors.

UK asset manager M&G invests $20M in Bitcoin derivatives exchange

The investment will open up cryptocurrency derivatives trading to traditional financial institutions.

The investment arm of United Kingdom-based pension fund M&G has invested $20 million in the country’s first regulated Bitcoin (BTC) derivatives exchange, Global Futures & Options Holdings (GFO-X).

An announcement from M&G and GFO-X outlined the investment details, which form part of a $30-million Series B funding round for the derivatives exchange. The platform will initially offer clearing of Bitcoin index futures and options contracts.

The move provides a platform for traditional finance institutions to gain exposure to various cryptocurrency derivative investment products. GFO-X is set to become a Financial Conduct Authority (FCA)-regulated and centrally cleared trading platform for crypto derivatives.

Institutional investors are buying through crypto winter: Survey

Institutional investors continue to see the long-term potential of crypto and have been loading their bags throughout the year, according to a survey.

A survey of institutional investors suggests that their cryptocurrency allocations have increased over the last year despite the industry going through a prolonged crypto winter.

A Coinbase-sponsored survey released on Nov. 22 and conducted between Sep. 21 and Oct. 27, found that 62% of institutional investors invested in crypto had increased their allocations over the past 12 months.

In comparison, only 12% had decreased their crypto exposure, indicating most institutional investors may be bullish on digital assets in the long term despite prices falling, according to the survey.

More than half of the investors surveyed said they were currently, or planning, to use a buy-and-hold approach for cryptocurrencies, with the belief that crypto prices will stay flat and range bound over the next 12 months.

Additionally, 58% of respondents said they expected to increase their portfolio’s allocation to crypto over the next three years, with nearly half “strongly agreeing” that crypto valuations will increase over the long term.

As has been widely reported before, regulatory uncertainty was once again the factor most investors were concerned about when weighing up whether to invest in crypto, particularly among those planning to invest in the next 12 months, where 64% noted concerns.

The representative sample of the Coinbase survey consisted of 140 institutional investors based in the United States who collectively have assets under management totaling around $2.6 trillion. The survey was conducted by business-to-business publisher Institutional Investor’s Custom Research Lab.

In October, a survey of institutional investors by Fidelity Investments subsidiary, Fidelity Digital Assets, released on Oct. 27, had similar findings. In an interview with Cointelegraph, Fidelity head of research Chris Kuiper noted:

“They’re agnostic to some of this crazy volatility and price because they’re looking at it from a very long-term perspective. They’re looking over the next years, five years, decade or more.”

It is worth noting that both these surveys were conducted prior to the collapse of FTX, which according to CoinShares, has led to a record surge in short-investment products, while total assets under management of crypto institutional investors are now at $22 billion, the lowest in two years.

CoinShares’ James Butterfill on Nov. 21 said the increase in short investments is likely “a direct result of the ongoing fallout from the FTX collapse.”

FTX crisis leads to record inflows into short-investment products

The aftermath of FTX’s collapse has soured crypto investor sentiment with “record” inflows into short-investment products last week, said CoinShares.

Institutional investors have responded to the negative sentiment caused by FTX’s collapse, with record institutional inflows into crypto-focused short-investment products.

According to CoinShares chief strategy officer James Butterfill, 75% of the total inflows by institutional crypto investors for the week ending Nov. 18 were placed in short investment products — essentially a bet that crypto prices will decline.

Butterfill said the takeup of short positions by investors is likely “a direct result of the ongoing fallout from the FTX collapse,” while the total assets under management (AUM) for institutional investors is now at $22 billion — the lowest in two years.

Over the week, $14 million was poured into short-Ether (ETH) investment products. CoinShares said it was “the largest weekly inflow on record.”

CoinShares cited “renewed uncertainty” over Ethereum’s Shanghai upgrade slated for Sep. 2023 and mentioned the sizeable amount of ETH held by the FTX exploiter as possible reasons for the negative sentiment.

Inflows into short investment products for Bitcoin (BTC) hit $18.4 million. Bitcoin short products were reported to have an asset-under-management (AUM) of $173 million coming close to the $186 million high.

Investors are also seemingly dropping altcoins with Solana (SOL), XRP (XRP), BNB (BNB) and Polygon (MATIC) product outflows totaling $6 million.

The newly reported inflows are a slight change from the week prior, which saw the largest inflows in 14 weeks to crypto products totaling $42 million, although short Bitcoin products already started to see inflows of $12.6 million and blockchain equity products recorded the largest weekly outflow since May 2022.

Meanwhile, the ripple effect of investor distrust for centralized exchanges is taking hold in the traditional finance market with Coinbase posting an all-time low share price on Nov. 21.

The crypto exchange’s share price dropped 8.9% on the day, slipping to under $41, according to Google Finance. It has now slightly recovered to around $41.20 at the time of writing but continued to trade at a slight 0.19% negative after hours.

Coinbase’s stock price is down almost 88% since it went public on Apr. 16, 2021.