In 2022, crypto fund investments were very low, the lowest since 2018, and a recent report shares insights into the same.
As per a recent report shared by a crypto firm, “Digital assets saw inflows—investors putting money into crypto products—totaling $433 million for the whole of 2022, the lowest since 2018 when there were inflows of only $233 million.” The figures for 2022 mark a 95% decrease from 2021, when the inflows totaled $9.1 billion, and about a 93% drop from 2020, when the inflows totaled $6.6 billion.
2022 has been opined to be an unfortunate year for crypto as the data suggests that the market capitalization, which started at $2.3 trillion, ended at around $820 billion. This marked approximately 64% of the value that used to be in crypto markets.
The firm’s report specifically tried tracking activities in the exchange-traded products (ETPs) or instruments to gain exposure to crypto products. The funds included Grayscale’s Bitcoin Trust (GBTC) or Digital Asset ETPs from other sources as they have been popular ways for institutional investors to get engaged with crypto even if the investors or the clients are a bit comfortable hodling crypto assets directly.
However, sources reveal that not all of these products are designed for investors with an optimistic stance on crypto.
James Butterfill, the head of research at the crypto firm which published the report, said that even though the figures represented only 1.1% of total Bitcoin inflows, it remains a “niche asset.”
He also noted that the short-investment products saw inflows of $108 million. To short an investment product is to bet against it and see profits when (and if) the asset does fall in price.
In November, following the collapse of the FTX exchange, the researcher tweeted that inflows to short-investment products had reached a new record. He briefed that the short-investment product inflows accounted for a major share of the total inflows, around 75%, while the assets under management touched their 2-year low. In the words of Butterfill, as mentioned in the report:
“Short-investment product inflows represented 75% of the total inflows, suggesting aggregate sentiment was deeply negative for the asset class while [assets under management] is now at the lowest point in two years at $22 billion.”
However, the situation has only gotten worse since then, as per the latest report. The asset undermanagement dropped from $22.2 billion to $21.8 billion in assets held in exchange-traded crypto funds.
On November 22, Todayq News reported that a significant share of negative sentiments for the asset class can also be inferred from the declining trend noticed in assets under management in crypto investment products hitting its two-year low levels. As per data maximum investors have put massive money into short-Ethereum investment products making a sum of $14 million.