Crypto Crisis Shrinks ETF Assets in Market That Embraced Them
Retail investors in Canada were quick to put money into cryptocurrency exchange-traded funds after regulators allowed a proliferation of products that track Bitcoin, Ether and other digital assets. They've lost most of it in a year.
Canadian-traded crypto ETFs had just C$1.64 billion ($1.22 billion) in assets under management as of Nov. 18, according to calculations from National Bank of Canada analyst Daniel Straus. That's down more than three-quarters from the C$7.3 billion value in those funds on Nov. 30 last year.
The collapse of Sam Bankman-Fried's FTX, on the heels of other bankruptcies in the sector, has dealt a debilitating blow to confidence in digital assets. Other large crypto firms have been shaken as contagion spreads: Genesis Global, a US cryptocurrency broker, is seeking emergency funding to stay afloat, while BlockFi Inc. is also said to be in dire financial straits.
Wall Street Beat: Why the Genesis Contagion Matters After FTX
“The effect of FTX has likely led to a lengthening of what would be considered a crypto winter, a period of people's lack of focus on the space or lack of trust in the space,” Som Seif, chief executive officer of Purpose Investments Inc., said in an interview.
In a measure of how swiftly the market has changed for risk assets, a single money-market ETF managed by CI Financial Corp. now has more in assets than all the crypto ETFs listed in Canada combined. The CI fund applies the simplest investment strategy imaginable: it puts the cash into interest-paying savings accounts at commercial banks.
The vast majority of the decline in ETFs assets has come from the falling price of Bitcoin and other holdings, not from outflows, which have been small. Crypto ETFs saw C$51 million of
Read more on tech.hindustantimes.com
