Crypto inflows defy the crash of the fund values

In the eyes of many, the convention of cryptocurrencies only oppose because they exist because they are supported by nothing more substantial than lines from computer code.

But despite their loss of value in the past few months, the digital tokens have continued to invest investments through stock markets traded.

Typically, people as herd animals often tend to pile up in financial systems that rise in value and run into the mountains in the event of falling ratings - whereby they ignore the argumentation logic of shopping at low prices.

However,

crypto fans have shown a contrasting tendency in a bucket-by reducing money in ETPs despite a brutal sale that the market capitalization of cryptocurrencies from a maximum of $ 3.2 trillion in November 2021 continued to pump them in ETPS

Even in the middle of this bloodbath, crypto ETPS-d. h. Those who invest directly or through futures contracts and not only invest in shares connected to the sector-this year so far global net inflows of 379 million trackinight.

The view of throwing good money after bad money has not proven to be deterrent. According to the trackinight, investors have pumped $ 26 million in the Vaneck Vectors Avalanche ETN (VAVA) since its introduction in December. Nevertheless, the market capitalization has suffered a loss of value from 82 percent to only $ 5.6 million since the beginning of the year.

The market capitalization of the purepose Ether ETF (Ethh) fell to only $ 42.5 million in a similar way, although this year 176 million was taken, as track inight data show. Likewise, the net inflows of USD 107 million in the Coinshares FTX Physical Staked Solana ETP (SLNC), which was launched in March, have shrunk to a market capitalization of USD 34.3 million.

"It is surprising because we usually see that when investing with high risk and high returns, such as crypto, the money tends to follow the performance," says Todd Rosenbluth, research manager at Vettafi, an ETF data analysis company.

"People want to be part of something that works, and they tend to move out of assets that do not work. But there are large supporters of the long -term potential of crypto and the value that can add to a portfolio, so that investors have used volatility to increase their commitment instead of moving away," he adds.

Kenneth Lamont, Senior Fund Analyst for passive strategies at Morningstar, says that the surprisingly robust streams probably reflect "an enormous need to catch up".

"This is the reason for a certain type of investor to give access to the investment class that would not necessarily start and set up a wallet, etc. or cannot be able to set up or cannot be able to do for regulatory reasons, so I am not surprised that there is a significant level of interest," explains Lamont.

The asset managers have also retained trust instead of being discouraged by the losses. According to the trackinight, a total of 39 crypto ETPs were launched in the first seven months of 2022. This pace corresponds to the 68 market launches in the calendar year 2021 and is much more than in all years before 2021.

The largest providers also begin to show interest. In August, Blackrock, the world's largest asset manager, revealed plans for a spot bitcoin private trust in the USA, where physical crypto ETPS are still prohibited. And that despite the fact that CEO Larry Fink said in 2017 that "Bitcoin only shows how great the demand for money laundering is in the world".

five years ago, Blackrock also admitted that despite a strong downturn in the market for digital assets, it was still a considerable interest of some institutional customers at this time, how they can access these assets efficiently and inexpensively.

In July, the British investment house ABRDN acquired a participation in a digital asset exchange, just a few weeks after the rival Schroders had acquired a minority stake in the Swiss digital asset manager forteus.

In the meantime, Fidelity of the Us, the largest house that has introduced crypto ETPs, recently added a Bitcoin option to its retirement offer.

rosenbluth says "he would have expected product development to slow down because investors lost money through these strategies in 2022".

He adds: "I am surprised that asset managers are willing to be patient and to have the pendulum rejected in the direction of the long -term performance of these strategies."

rosenbluth suggests that a factor that heated up the launch madness in the limited degree of product differentiation is inherent in crypto ETPs. The competition is usually based on costs or liquidity - therefore it can be crucial to act early in order to successfully collect assets in the long term.

lamont also believes that crypto is one of the few areas in which there are “new territory” for providers to assert claims if you consider how overcrowded the majority of the ETF landscape has become.

that stirs up a land robbery. "In the industry there is a clear feeling that everyone would like to be there," says Lamont. "It is a new asset class. Just because we have experienced a global drop in prices does not mean that this will not stay that way in one form or another."

As a result, products are "launched in the expectation of the next crypto bull run," says Lamont.

"Most people think that, unless [Cryptocurrencies] are no longer regulated, they will exist forever in one form or the other.