Bringing you live news and features since 2006 

Crypto products could be back on the agenda: Cerulli Associates 

RELATED TOPICS​

Europe’s current ‘risk-off’ market environment is not a nurturing one for crypto assets and net flows have been negative year to date. However, it is too soon to dismiss the chance of significant asset growth, according to latest research from Cerulli Associates.

Cerulli Associates believes that the launch of the region’s first spot bitcoin ETF could reignite interest in crypto assets.

“The tide could still turn for crypto exchange-traded products (ETPs) if prices stabilize enough to satisfy potential institutional investors,” says Fabrizio Zumbo, director, European asset and wealth management research at Cerulli. 

Cryptocurrency ETP assets under management (AUM) in Europe were EUR4.4 billion (USD4.7 billion) as of August 2023—a little more than half what they were at the end of 2021. Cerulli writes that aside from a generally challenging market environment, the crypto market was hit by the collapse of the TerraUSD stablecoin, the Terra Luna coin, and, even more significantly, the FTX crypto exchange. 

Nevertheless, the number of cryptocurrency ETP launches did not abate. There were 55 new listings in 2022, following 54 in 2021 and 10 the year before. 

This year, crypto assets have seen a very positive recovery of value, but net flows have been negative and enthusiasm for new launches has diminished―there were just six new Europe-domiciled crypto ETPs over the past eight months.  

However, despite the muted interest, there are a number of developments that could spark a revival in demand, the firm says. One is the supply of crypto ETFs. Crypto products in the European market are structured as exchange-traded notes, rather than holding the underlying assets directly. Yet London-based Jacobi Asset Management has launched Europe’s first spot bitcoin ETF. And, at the time of writing, BlackRock’s proposed equivalent was awaiting regulatory approval in the US, alongside six other applicants. 

“Cryptocurrencies have generally been viewed through the lens of retail investors. Yet the ETF issuers in Europe that Cerulli surveyed toward the end of last year believe there could be demand from institutional investors: 29 per cent ranked the institutional channel first for expected cryptocurrency ETP demand. Just 9 per cent ranked independent wealth managers first for expected demand, but 55 per cent ranked the channel second or third. Essentially, ETF issuers believe there could be interest in these products among both asset owners and private clients,” says Zumbo. 

European institutional investors may have discounted digital assets on environmental grounds, but some managers with products in this space are trying to address the energy-intensive nature of crypto assets.  

Another potential positive is that cryptocurrencies are gaining traction in developing countries that have suffered hyperinflation or where access to traditional banking institutions is limited. Further entrenchment of digital currencies in emerging markets could be used to make a long-term investment case, the firm writes.

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by