Institutional interest in cryptocurrencies hasn’t changed despite the market’s 60% drop from its all-time high, as most asset managers say they’re “very interested” in crypto-themed exchange-traded funds (ETFs).
On April 3, financial services company Brown Brothers Harriman (BBH) released its 2023 Global ETF Investor Survey, which surveyed 325 institutional investors, financial advisors and fund managers from the US, UK, Europe and China. investigation.
It found that nearly three-quarters of institutional investors claimed they were "extremely" or "very" interested in crypto ETFs, but the fallout from crypto winter appears to have dampened their appetite. Only a quarter said they expected to increase their allocation to crypto ETFs in the next 12 months, down 6% from 2022. While crypto-themed ETFs have dropped down some people's priority lists, nearly half still plan to add crypto ETFs to their portfolios this year to diversify their investments.
BBH explained that the increased interest in crypto ETFs is due in part to fund managers learning to live with the inevitable volatility of the crypto market: “As investors adjust to volatility, they are diversifying their portfolios and adding more innovative products. Even after a tumultuous year in the crypto space, interest hasn’t exactly cooled off.” BBH believes that a clearer crypto regulatory framework will further increase the need for exposure to related ETFs, as it will provide more “comfort” when doing business with the crypto industry:
“Initiatives such as the draft regulatory draft of the EU cryptoasset market proposal are expected to significantly ‘reduce’ asset managers’ exposure to cryptoasset investments and provide ‘additional comfort’ to fund managers participating in crypto transactions.”
More than 40 percent of respondents claimed to manage assets worth more than $1 billion, and more than half said they invested more than a quarter of their portfolio in ETFs.
The largest crypto ETFs include ProShares Bitcoin Strategy (BITO) and Bitwise 10 Crypto Index Fund (BITW) listed on the New York Stock Exchange (NYSE). BITO is reportedly the first bitcoin-pegged ETF launched in the U.S., while BITW tracks the top 10 cryptocurrencies by market capitalization.
Grayscale’s Bitcoin Trust (GBTC), while not an ETF, is one of the largest digital asset investment products traded on a stock exchange by market capitalization, with a current value of $11 billion, according to Google Finance.
Not all crypto ETFs are doing well as two Australian crypto ETFs the BetaShares Crypto Innovators ETF (CRYP) and the Cosmos Global Digital Miners Access ETF (DIGA) have been rated as the worst performers in the world as a result of the crypto winter ETF countries.
This led to the delisting of DIGA as well as the Cosmos Purpose Ethereum Access ETF (CPET) and Cosmos Purpose Bitcoin Access ETF (CBTC) by the end of 2022.
