Industry Updates

Crypto ETP investors buy the dip following China digital asset ban

Inflows into digital assets hit $95m in the past week

Theo Andrew

a group of gold coins on a keyboard

Crypto exchange-traded products (ETPs) recorded inflows of $95m last week as investors looked to capitalise on falling crypto prices following China’s crackdown on digital currencies.

The two largest coins, bitcoin and ethereum, saw their value fall by 8.5% and 9.8% respectively at their low points on Friday 24 September, as Chinese regulators placed a blanket ban on crypto transactions and mining.

Undeterred, investors used the dip as a buying opportunity, investing $50m into bitcoin and reversing the negative investor sentiment seen over the past two quarters, marking only the fourth week of positive flows from the last 17.

Ethereum recorded inflows of $28.9m via digital asset investment products, according to flows data from crypto ETP provider CoinShares.

Commenting on the flows, James Butterfill, investment strategist at CoinShares, said: “Sentiment has remained relatively buoyant for ethereum as the amount staked to the Eth2.0 progresses.

“By our estimates, 6.6% of Ethereum is staked to Eth2.0, with growth in staking essential for investor sentiment, as investors see it as a potentially environmentally alternative to other proof-of-stake digital assets.”

Elsewhere, solana ($3.9m), cardano (£2.6m), polkadot ($2.4m) and multi-asset crypto baskets ($6.4m) all recorded inflows. The flows into solana and polkadot represent 4.5% and 3.2% of their entire assets under management (AUM), according to CoinShares.

CoinShares’ ETP range accounted for $25.4m of the inflows while providers 21Shares and Purpose recorded $22.1m and $21.5m inflows, respectively.

Europe has continued to see a plethora of crypto ETPs launched over the past month. Last week, 21Shares joined VanEck in listing non-bitcoin and ethereum crypto ETPS on the Deutsche Boerse as the German regulator continues to ease restrictions on digital assets.

In May, China banned financial institutions and payment companies from providing cryptocurrency services following similar bans in 2013 and 2017.

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