A recent survey conducted by Brown Brothers Harriman (BBH) found that despite the cryptocurrency market being down 60% from all-time highs, a majority of asset managers remain “extremely interested” in cryptocurrency-themed Exchange Traded Funds (ETFs).
The survey polled 325 institutional investors, financial advisors, and fund managers from the United States, United Kingdom, Europe and China, and found that almost three-quarters of institutional investors claim to be “extremely” or “very” interested in crypto ETFs.
BBH suggests that the rise in interest for crypto ETFs is due to fund managers learning to stomach the inevitable volatility in the crypto market.
The survey found that while only a quarter of institutional investors are expecting to increase their allocation to crypto ETFs over the next 12 months, almost half of them still plan to “add” crypto ETFs to their portfolios this year to diversify investments.
Among fund managers, 58% in China are looking to add crypto ETFs to their portfolios, followed by 55% in the U.S. and 29% in Europe. The BBH report also suggests that a clearer crypto regulatory framework would further increase demand for related ETF exposure, as it will provide more “comfort” when doing business with the crypto sector.
BBH further noted that more than 40% of the respondents claimed to manage assets worth more than $1 billion, and over half said they have more than a quarter of their portfolio invested in ETFs.
The largest crypto ETFs include 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 largest cryptocurrencies by market cap.
Grayscale’s Bitcoin Trust (GBTC), while not an ETF, is one of the largest digital asset investment products by market cap traded on a stock exchange, with a current value of $11 billion according to Google Finance.
However, not all crypto ETFs have fared well, as the effects of the crypto market winter saw two Australian crypto ETFs – BetaShares Crypto Innovators ETF (CRYP) and Cosmos Global Digital Miners Access ETF (DIGA) – take the title as the worst-performing ETFs in the country.
It resulted in DIGA, along with Cosmos Purpose Ethereum Access ETF (CPET) and Cosmos Purpose Bitcoin Access ETF (CBTC) being delisted at the end of 2022.
Overall, the BBH report suggests that despite the dip in cryptocurrency prices, institutional interest in cryptocurrencies remains strong, with many fund managers looking to diversify their portfolios by adding crypto ETFs.
While a clearer regulatory framework is expected to further increase demand for related ETF exposure, it is worth noting that not all crypto ETFs have performed well, and investors should exercise caution when investing in this volatile asset class.
Institutional Crypto ETFs
In summary a survey by BBH found that despite the crypto market being down 60% from all-time highs, institutional interest in crypto-themed ETFs remains strong, with almost three-quarters of respondents claiming to be “extremely” or “very” interested in them.
The rise in interest is attributed to fund managers learning to stomach the inevitable volatility in the crypto market.