“Accelerating Demand” from Investors Sees Increased Inflows in Bitcoin & Crypto-Related Funds Despite Sell-Off


The demand for crypto-related products continues to increase, as evident from the growing flows into them.

As we reported last week, the first Bitcoin ETF had a spectacular debut on the Toronto Stock Exchange. Interest in this Bitcoin ETF (BTCC) was so intense that it traded $260 million on day two of its trading, “an astonishing 3x that of XIU, Canada's SPY.”

This product’s assets under management (AUM) have already surpassed half a billion dollars, at $564 million. Investors actually bought the dip that occurred this week as, during the market sell-off, it added 2,251 BTC, as per Glassnode.

Another crypto fund, Bitwise, sees an increase in its AUM, which has now surpassed $1 billion. Its products involve Bitwise 10 Crypto Index Fund (BITW), Bitwise Bitcoin Fund, and Bitwise Ethereum Fund.

“Crypto is at a turning point. We're seeing accelerating demand from professional investors and financial advisors for exposure to crypto,” said Bitwise CEO Hunter Horsley.

“Professional investors value index funds because they provide exposure while delivering peace of mind that the strategy will be managed and rebalanced as the category evolves.”

This week, Bitwise Asset Management also announced the launch of the Bitwise Decentralized Finance (DeFi) Crypto Index Fund to offer the institutional clients exposure to popular DeFi tokens, and it “quickly” resonated with investors.

“DeFi is the story of 2021. The growth and activity in the market is incredible,” said Matt Hougan, CIO of Bitwise.

The world’s largest digital asset manager, Grayscale, meanwhile has a total of $37 billion in AUM, which has taken a small drop after this week’s sell-off in the cryptocurrency market.

Companies associated with cryptocurrency are also enjoying growth, as seen in the shares of MicroStrategy and Japanese financial firm Monex Group.

While MicroStrategy's stock had a tough session yesterday, retracing nearly 50% from the peak in tandem with the crypto market. Despite falling, Monex is still the most expensive stock on the index of Japanese securities companies.

“There has been sharp growth in earnings at Coincheck,” SMBC Nikko analyst Takayuki Hara wrote in a note.

“The soaring price of Bitcoin has spurred trading activity and encouraged more individual investors to jump into the fray.”

The online brokerage, which owns crypto exchange Coincheck, has its profits soaring as clients flock to digital assets.

“People are starting to re-evaluate us” by realizing Monex isn’t just about stockbroking, said Chief Executive Officer Oki Matsumoto. “Our stock was underrated, to begin with.”

Half of the company's pretax income last quarter, 2.4 billion yen ($23 million), was generated by its crypto business.

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