Crypto assets under management are the lowest. Are crypto investment product assets dead after the FTX explosion?
Institutional clients gain exposure to cryptocurrencies mostly through Exchange Traded Funds (ETFs) or Exchange Traded Notes (ETNs). They generally avoid direct crypto exposure because these crypto investment products are regulated, and some of them are publicly traded.
Decreasing Assets Under Management
Assets under management (AUM) across all crypto investment products peaked in October 2021, when bitcoin was trading near its all-time high. The AUM gradually declined this year as the bear market intensified.
According to a CryptoCrypto report, November saw a massive 14.5% drop in total AUM across all digital asset investment products to $19.6 billion. The fall of the Sam Bankman-Fried empire resulted in massive turmoil in the crypto market, which AUM.
Venture capitalists may shy away from crypto investment products
The world’s largest asset managers such as BlackRock, Tiger Global and many more participated in FTX’s Series B funding round. The collapse of FTX resulted in a significant reduction in the balance sheets of these asset managers as they raised over $420 million in Series B rounds.
BlackRock invested $24 million in FTX last year. According to a New York Times article, BlackRock CEO Larry Fink warned that most crypto startups will fail. Larry Fink predicted that the spectacular failure of FTX would turn venture capitalists back to investing based on science and not hype.
It can be clearly seen from the AUM chart that institutions are withdrawing their capital from crypto. In November, most crypto investment products are giving negative returns of over 20% according to Cryptocurrency Analysis. Such negative returns may drive institutions away from the crypto industry. If Larry Fink’s predictions are correct, the crypto investment product asset may not be around for long.
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