Institutional interest in cryptocurrency has not waned despite the market down 60% from its all-time highs, as most asset managers reported being “extremely interested” in crypto-themed ETFs. cryptocurrencies.
On April 3, financial services firm 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 Chinese.
Nearly three-quarters of institutional investors said they were “extremely” or “very” interested in cryptocurrency ETFs, but the effects of the crypto winter have dampened their appetite, with only a quarter saying they expect to increase their allocation to cryptocurrency ETFs. cryptocurrencies in the next 12 months, a 6% drop from 2022.
The findings of our 2023 Global ETF Investor survey are out. Explore the report to learn about the shifts ETF investors are making in the face of macro and market changes, and what the last decade in ETFs can tell us about the next ten years. https://t.co/KeTeAUfz8G#ETFs pic.twitter.com/ueDlwvynNQ
— Brown Brothers Harriman (@bbh) April 3, 2023
While cryptocurrency ETFs fell off the priority list for some, nearly half still plan to “add” cryptocurrency ETFs to their portfolios this year to diversify investments.
BBH explained that the rise in interest in cryptocurrency ETFs is partly because fund managers are learning to digest the inevitable volatilities of the cryptocurrency market:
“As investors adjust to volatility, they diversify their portfolios and add more innovative products. Even with a tumultuous year in cryptocurrency, interest hasn’t entirely cooled.”
BBH believes that a clearer cryptocurrency regulatory framework will further increase the demand for exposure to related ETFs, as it will provide more “convenience” when doing business with the cryptocurrency sector:
“Initiatives such as the proposed EU Crypto Asset Markets draft regulation are expected to significantly “de-risk” crypto asset investments for asset managers and provide an “additional layer of comfort” for fund managers to commit to cryptocurrency.”
More than 40% of respondents said they manage assets worth more than $1 billion, and more than half said they have more than a quarter of their portfolio invested in ETFs.
Among the largest cryptocurrency ETFs are the ProShares Bitcoin Strategy (BITO), available on the New York Stock Exchange (NYSE), and the Bitwise 10 Crypto Index Fund (BITW). BITO was reportedly the first bitcoin-linked ETF launched in the United States, 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 by market capitalization, with a current value of $11 billion, according to Google Finance.
Not all cryptocurrency ETFs have fared well, as the effects of the cryptocurrency market winter saw two Australian cryptocurrency ETFs – BetaShares Crypto Innovators ETF (CRYP) and Cosmos Global Digital Miners Access ETF (DIGA) – take off the country’s worst-performing ETF stock.
The result was that DIGA, along with the Cosmos Purpose Ethereum Access ETF (CPET) and Cosmos Purpose Bitcoin Access ETF (CBTC) were delisted at the end of 2022.
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