Why the demand for crypto ETPs is increasing despite the market slump

Despite the slowdown in the underlying markets, the number of exchange-traded products (ETPs) based on crypto continues to grow.

Nearly half of the more than 180 crypto ETPs currently available were launched after bitcoin began a significant depreciation over the past 11 months since its peak last November.

According to a recent note from Morgan Stanley, this indicates that investment firms are confident that cryptocurrencies, as well as blockchain technology, will finally emerge this year, despite the struggle in the market.

A report by KPMG details a similar incident occurring with cryptocurrency companies.

What is the appeal of Crypto ETP?

Crypto-based ETPs have proven popular because they provide exposure to volatile digital assets, without investors having to worry about the other complexities surrounding the technology.

These range from understanding the implications behind personally managing a digital wallet to protecting your crypto against hacks and fraud schemes.

According to the latest report from CoinShares, digital asset investment products have experienced a total inflow of $481 million year-on-year.

While data from Morgan Stanley claims that 95% of the 180 crypto funds available are dedicated to the top two cryptocurrencies, Bitcoin and Ethereum, other data provides a more nuanced look.

According to one expert, there has been an increase in the amount of asset allocation for funds that combine some of the largest cryptocurrencies by market capitalization, apart from just bitcoin and ethereum.

Data from CoinShares shows that the share of inflows directed towards products based on altcoins such as Solana, Cardano and Ripple’s XRP is increasing.

Meltdown saw the market fall by 70%

Nevertheless, even as the availability of these crypto products continues to expand, the total market value has shrunk by almost 70% to $24 billion over the past year. This is reflected in the prices of some of the most prominent products based on bitcoin.

Grayscale Bitcoin Trust, the world’s largest bitcoin fund, saw its total assets under management drop 34% from last year’s $30 million to $12.2 billion.

Meanwhile, the ProShares Bitcoin Strategy ETF, one of the few crypto ETPs offered in the United States, is one of the few crypto ETPs offered in the United States, as it tracks bitcoin futures rather than spot, with its assets under management (AUM) also declining by the end of September only. $600 million left. ., after receiving over $1 billion during its launch last year.


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