Oct. 18 (Reuters) – More and more funds are betting on the long-term appeal of Bitcoin and Ethereum. This is a gritty bet in the depths of crypto winter.
Unfazed by the price crash of the past 11 months, investment firms have dumped a flurry of exchange-traded funds in anticipation of the eventual adoption of elite cryptocurrencies and their underlying technology. .
In a report published earlier this month, Morgan Stanley said that of the more than 180 active crypto exchange-traded products (ETPs) and trust products globally, half have been launched since the start of the Bitcoin bear market. As the price of cryptocurrencies plummeted, the surge occurred even though the total assets in the market fell by 70% to his $24 billion during that period.
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About 95% of these 180 funds focus on the top two coins, Bitcoin and Ether, according to Morgan Stanley.
Chen Arad, co-founder of cryptocurrency risk watch firm Solidus Labs, said: “Naturally, when the market slows down, prices fall, people lose money and their appetites go down.” Not in the long run. Overall, I don’t think anyone is giving up.”
The attraction of ETPs is that they provide exposure to digital assets on regulated stock exchanges. So retail and institutional investors don’t have to worry about keeping their cryptocurrencies safe and safe from hacking and robbery.
When it comes to money, cryptocurrency investment products have attracted about $453 million in net inflows this year, according to a report from digital asset manager Coinshares, with much of that going into bitcoin, which includes the largest cryptocurrency, and investment vehicles. It’s flowing
Eliezer Ndinga, research director at 21shares, said, “We are seeing more asset allocations in baskets that combine the top 5 or 10 crypto assets by market capitalization. It’s an escape from the world.”
Other major cryptocurrencies include Solana, Cardano, and Ripple.
tick by tick
However, the most active crypto ETP products are registered outside the United States, while Switzerland, Canada, Australia, and Brazil are moving forward with spot crypto offerings.
One reason is that US regulators have rejected spot Bitcoin fund applications, citing multiple reasons, including the lack of oversight sharing agreements with regulated markets related to the underlying assets of spot funds. .
Investors in futures-based funds often have to incur the additional costs of futures rollovers as contracts get closer to the settlement date in order to maintain their positions.
Bitcoin has fallen 17% over the past three months, while the ProShares Bitcoin Strategy ETF, which tracks Bitcoin futures, has fallen about 21%.World’s Largest Bitcoin Fund, Grayscale Bitcoin Trust (GBTC.PK)down 34% at the same time.
The ProShares Bitcoin Strategy ETF has dwindled to just over $600 million in assets under management (AUM) at the end of September, according to Refinitiv Ripper data. When he debuted a year ago, he made over $1 billion in a matter of days.
Grayscale Bitcoin Trust’s AUM fell from over $30 billion at the end of 2021 to $12.2 billion, data from the company showed.
Will Peck, head of digital assets at WisdomTree, said a Bitcoin spot ETF was blocked by US regulators last week.
“I think we’ll get there eventually, but it’s going to be a holding pattern for now.”
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Reporting by Medha Singh and Lisa Pauline Mattackal of Bengaluru. Edited by Vidya Ranganathan and Pravin Char
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