Delphi Digital Warns of Declining Institutional Interest in Crypto Amid Market Downturn
Delphi Digital, a blockchain research firm, has expressed concerns over the dwindling interest of institutional investors in the cryptocurrency market due to the ongoing downturn. The firm reports that flows to digital asset treasury companies DATs have plummeted by 90 from their August peak.
Institutional capital is sitting on the sidelines while existing positions hemorrhage value,
Delphi Digital concluded.
In August, institutional inflows reached 5.5 billion, primarily for Bitcoin purchases. However, by October and November, this figure had dropped to 500 million as institutions opted to wait for market stabilization. The strategy segment of DATs has also weakened significantly, with its bitcoin multiple-to-net-asset-value mNAV falling from 2.5 to 1.2.
This decline in institutional investment is concerning as it could lead to increased market volatility. Analysts had previously noted that institutional investors could bring stability to the market. However, reports indicate that DATs have been unloading their positions even at a loss during this market crash.
Looking ahead, while the use case for bitcoin and crypto treasuries remains valid, the recent price downturn has made DATs more aware of the cryptocurrency market s implied volatility. It is expected that DATs will evolve their strategies to address these challenges.