Crypto meltdown opens window to institutional investors, say experts
NASD IN VESTORS gained N26.46 billion from profit-taking activities last week due to positive movement in prices and a ‘one for one’ bonus declaration of by FrieslandCampina Wamco Nigeria PLC as the OTC exchange market capitalization inched higher to N1.06 trillion compared to N1.03 trillion last week.
In the same vein, the NASD OTC Securities Exchange Index closed the week with a positive movement on the NSI whose return increased by 2.57 percent to close the week at 807.75 points against 787.54 points the past week.
The level of trading activities on the exchange was bullish throughout the week as there was a 1,270.23 percent increase in the total value traded during the week to N2.42 billion in values compared to N176.72 million in the previous week. Also, the total traded volume during the week was 33.96 million units compared to 2.05 million units in the previous week leading to a 1,554.10 percent week on week increase.
Furthermore, the week closed with Food Concepts PLC ranking top among the five most traded securities by volume after the stock garnered 25 million units traded during the week and was trailed by VFD Group with 7.34 million units, Niger Delta Exploration and Production traded 810,476 units while Central Security Clearing System recordregulatory ed 278,850 units and then FrieslandCampina Wamco Nigeria PLC was the fifth most traded stock by volume traded in the week with 257,900 units.
Leading the table for most traded stocks by value through the week, VFD Group recorded trades worth N2.20 billion, followed by Niger Delta Exploration and Production with trades valued at N155.02 million, FrieslandCampina Wamco Nigeria PLC recorded N30.23 million in trade value trailed behind by Food Concept with N21.75 million and Central Securities Clearing System PLC was the fifth most traded Security by value for the week with a total value of N4.50 million.
As for the top gainers for the week, Central Securities Clearing System PLC closed the week at N17 representing an 18.19 percent increase from the previous close of N15.83. Also, FrieslandCampina Wamco Nigeria PLC closed the week at N120, representing a 9.09 percent increase from the previous close of N110 while Food Concepts PLC closed the week at N0.87 representing a 4.82 percent increase from the previous close of N0.83 and Niger Delta Exploration & Production PLC closed the week at N210, representing a 3.45 percent increase from the previous close of N203.
On the other hand, Vital Products PLC emerged as the lone loser for the week as it closed the week at N2.10 representing a 9.87 percent decrease from the previous close of N2.33.
COULD THE CONTINUING hullabaloo in the crypto space be another dot-com bubble like the type that occurred in the year 2000? No one can really come up with specific answers as we can obviously see that the global crypto market has been on meltdown across boards following a dip in market capitalization by 4.8 percent over the past week to $1.75 trillion, according to a report by Coinmarketcap. But regardless of the dip witnessed, experts are saying this presents an opportunity for institutional investors to begin taking strategic positions at better levels.
It is this recent meltdown in the crypto market that experts say could be the big catalyst to trigger huge trading opportunities for institutional players to take a favourable position in the market in the coming days.
After almost a month of consistent outflows, a report by Coinshares revealed that the recent inflows recorded were precipitated by advantages taken by investors by adding to their position the substantive price discounts, but the report also carried some degree of scepticism as past week’s negative sentiments had run its course as the recent investment product trading activity did not match that historically seen during extreme price weakness periods.
“The markets are in meltdown but this may present an opportunity for institutional players to start building positions and push stablecoin regulation to provide more confidence,” said Martha Reyes, head of research at BEQUANT, the digital asset prime brokerage and exchange.
Continuing, Reyes said, “While we can’t call the bottom and correlations among asset classes remain elevated, Bitcoin has survived corrections of 70-80 per cent in the past. This may be an opportunity for institutions to build positions at better levels.”
According to her, the uncertainty around stablecoins is a concern, adding that this uncertainty could lead to another flush out; and that the market may finally get the much needed framework that could entice institutions in. “Regulators tend to be reactive, so this may be the catalyst for greater stablecoin regulation,” Reyes said.
Relatedly, the crypto markets went down around 16 percent overnight as Bitcoin fell below $28,000 in the early days of the week, and to levels last seen in the year 2020 before creeping back to above $30,000.
Markets across the board have been in meltdown, with high declines in investments in the likes of Peloton, Robinhood and Coinbase by 91 percent, 89 percent and 77 percent, respectively.
Elsewhere in the US, the S&P 500 lost over 4.5 percent at some point in the week, while the Nasdaq Composite fell to its lowest level since November 2020, falling by more than three per cent.
Also, Tether dropped to 97 cents, losing its parity with the U.S. dollar. On Coinbase, it fell as low as 96 cents as traders sold USDT for U.S. dollars amid poor sentiment for stablecoins in crypto communities.
In a snapshot of the coin flows during the past week, Bitcoin-based investment products saw the largest portion of movements, amounting to $45 million. Despite the fact that these products experienced the most positive sentiment from investors recently, total assets under management for Bitcoin-based products have tumbled to a level seen during a similar period of lower sentiment towards the beginning of the year.
Also, Ethereum-based investment products sustained their negative smudge, with outflows amounting to $12.5 million, bringing total year-to-date outflows to $207 million, which represents 0.8 percent of AuM overall.
But, in the midst of other altcoins, Solana was the only one to see any notable inflows, amounting to $1.9 million, while Cardano and Ripple each received $200,000 in inflows, and Polkadot saw $400,000 in outflows. Furthermore, multi-asset investment products also saw inflows over the past week, which amounted to $1.7 million.