Crypto-Based ETFs Shines
In the digital finance sphere, the rise of global crypto exchange-traded products (ETPs) has emerged as a standout story in 2023. These financial products have exhibited a growth trajectory that far outperforms the underlying assets they represent.
In a comprehensive report, Fineqia, a prominent digital asset platform, revealed the meteoric rise of crypto-based ETPs offered by industry heavyweights such as CoinShares, 21Shares, and Grayscale. Between January 1 and October 31, 2023, the platforms’ combined assets under management (AUM) increased by 91%, owing to unprecedented market dynamics.
Also, the surge in crypto ETPs has outpaced the growth rate of the underlying digital assets by 30%. While cryptocurrencies experienced a 70% increase during the same period, the exponential rise of ETPs based on these assets has far outpaced their performance.
Fineqia’s research included an examination of 168 crypto ETPs currently in circulation.
Involving Institutional ETPs
Fineqia’s extensive research, which includes renowned entities such as CoinShares, ETC Group, Grayscale, 21Shares, VanEck, WisdomTree, and various other issuers, emphasizes the depth of analysis undertaken to capture the pulse of this rapidly growing financial domain. Fineqia research analyst Matteo Greco highlights the meticulous data-gathering process, including the updates that are usually available on the first business day of each month, which provides additional statistics following the previous month’s conclusion.
According to Fineqia’s research, the significant disparity between the rise in crypto ETP assets under management (AUM) and the overall growth of the crypto market is because of Bitcoin’s dominance within digital asset ETPs. Per data from CoinGecko over the past year, Bitcoin commands a 75% share of total crypto ETP AUM, surpassing its approximately 50% share of the overall crypto market.
Bitcoin’s growth in the crypto market skyrocketed by 104% between January 1 and October 31, 2023.
Meanwhile, CoinGecko data also revealed that Ether (ETH), the second-largest cryptocurrency by market cap, experienced a commendable 50% increase during the same timeframe.
The AUM Trends
The crypto ETP market experienced a remarkable surge in October, with AUM reaching $38 billion, a significant 25% month-over-month increase. According to Fineqia, this milestone is the highest figure recorded since May 2022, showing renewed investor interest in the crypto ETP space.
Concurrently, the broader cryptocurrency market experienced a significant upswing, rising 17% in market capitalization from $1.15 trillion to $1.35 trillion. Bundeep Singh Rangar, CEO of Fineqia, emphasized the significance of these trends, explaining that they signal growing excitement about the potential introduction of a spot Bitcoin exchange-traded fund (ETF) in the United States.
This sentiment is consistent with the growing interest and speculation in the crypto ETP market and the broader crypto sphere. Accordingly, the SEC faces critical decisions on 12 spot Bitcoin ETF applications submitted by asset managers like 21Shares and WisdomTree.
However, the regulator recently postponed decisions on three more spot Bitcoin ETF applications from Franklin Templeton, Global X, and Hashdex.