The prices of bitcoin and other digital assets are sliding, but flows data for globally listed crypto exchange traded products remain optimistic for the asset class.
Investors approaching bitcoin and digital assets with a long-term perspective, which flows data suggest is happening, could be a boon for funds such as the Grayscale Bitcoin Trust (GBTC).
“Crypto ETFs and ETPs listed globally gathered net inflows of US$785 million during March, bringing Q1 net inflows to US$859 million, which is much lower than the US$1.64 billion gathered in Q1 2021. Total assets invested in Crypto ETFs and ETPs increased by 19.6% from US$13.61 billion at the end of February 2022 to US$16.28 billion at the end of Q1,” notes ETFGI.
In the U.S., investors and fund issuers alike are still waiting for regulators to approve a spot bitcoin ETF. For now, the bitcoin ETF landscape in this country revolves around futures-based products and equity-based ETFs with positions in crypto-correlated stocks.
However, as the ETFGI data indicate, many of the world’s crypto exchange traded products trade outside the U.S., and many of those products offer spot bitcoin exposure. Suggesting that the space is ripe for innovation and that the U.S. is behind the curve, several of the largest globally listed crypto exchange traded products aren’t linked to bitcoin. Rather, they provide exposure to ethereum and solana.
“Since the launch of the first Crypto ETP in 2015, the Bitcoin Tracker One-SEK, the number and diversity of products have increased steadily,” adds ETFGI. “There were 123 Crypto ETPs listed globally, with 392 listings, with assets of $16.28 billion, from 24 providers listed on 17 exchanges in 13 countries. During March, 13 new Digital Asset ETFs/ETPs were launched.”
Proving that the U.S. bitcoin ETF market could use a spot product, just one of the world’s 20 largest crypto ETFs trades in the U.S., and it’s naturally a futures-backed product.
Some market observers are apt to argue that this point alone is confirmation that domestic regulators should approve a spot bitcoin ETF. Grayscale — GBTC’s issuer — is pushing for just that. The fund is currently structured as an index fund, meaning that it’s not priced consistently over the course of a trading day like ETFs are.
It’s widely expected that if GBTC becomes an ETF, it will likely be one of the most successful new ETFs of all time. With $24.5 billion in assets under management today, GBTC, if it becomes a ETF, would be one of the largest alternatives or commodities ETFs right off the bat.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.