Global crypto fund assets slump 37% in June to $21.6 billion, says report

Global crypto fund assets slump 37% in June to $21.6 billion, says report


NEW DELHI: Assets under management (AUM) across digital asset investment products crashed 36.8% year-on-year to $21.6 billion as of 23 June, according to a report by digital asset data provider CryptoCompare.

In June, prices of bitcoin and ethereum fell 34.8% and 38.6%, as of 27 June, respectively, driven by uncertainties surrounding possible insolvency of crypto lending companies, including the crypto native fund, Three Arrows Capital.

Nervous sentiment around riskier assets continued to lead the narrative in the markets, with the US Federal Reserve raising interest rates by 0.75%, the largest hike since 1994. This hawkish stance reflected in the falling AUM of crypto products last month.

As per the report, June was a turbulent month for cryptocurrencies with the AUM of all major crypto investment product types falling sharply.

Exchange-traded funds (ETFs) experienced the largest drop, declining 52.0% to $1.31 billion. Trust products, which have a market share of 80.3%, fell 35.8% to $17.3 billion in June, while ETCs and ETNs fell 36.7% and 30.6% to $1.34 billion and $1.61 billion, respectively.

All four product types made new record lows with trust products recording the lowest AUM since December 2020, while ETCs AUM reached its lowest since October 2020. ETNs and ETFs followed, recording their lowest AUM since January 2021 and April 2021, respectively.

An investment trust is a closed-ended fund set up as a company, such that its shares can be bought and sold on an exchange or over the counter (OTC) market.

On the other hand, an exchange-traded note (ETN) is similar to an ETF, however, a major distinction between the two is that investors don’t own the underlying for an ETN.

An exchange-traded certificate (ETC) or synthetic ETN is a type of non-interest-bearing debt instrument in the form of a bearer certificate that tracks the behaviour of an underlying asset class using derivatives 1: 1.

In June, all digital investment products saw a decline in AUM, except for 21Shares Short Bitcoin ETP (SBTC). The product, designed to provide inverse exposure to Bitcoin’s performance, recorded a 1.30% rise in AUM from May.

The ETP currently has an AUM of $16.5 million, which is an all-time high. It was also the only product that registered a positive 30-day return (30.8%) as of 23 June.

The ETP which obtains short exposure through borrowing Bitcoin and simultaneously selling it on the execution platform, saw its AUM rising for the third month in a row.

“This is reflective of the negative price action of bitcoin, making it one of the few products that is able to take advantage of the current macroeconomic trend,” the report said.

Further, Purpose and CoinShares’ exchange traded products recorded the largest outflow in bitcoin and ethereum during June.

Purpose Bitcoin ETF (BTCC) sold 18,170 BTC while 3iQ CoinShares Bitcoin ETF (BTCQ) saw 7,384 bitcoins flow out of the fund (as of 24th June). Overall, the two registered drops of 56.7% and 57.1% in AUM in June, respectively.

ProShares Bitcoin Strategy ETF (BITO) saw the largest inflow after purchasing 7,264 bitcoins during the month.

Among ethereum products, 3iQ CoinShares’ Ether ETF (ETHQ) recorded the largest outflow with 26,499 ETH, closely followed by Purpose Ether ETF (ETHH) which sold 24,409 ETH in June. The two saw a sharp decline of 60.0% and 52.6% in AUM, respectively

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