On Tuesday, State Street Global Advisors and Galaxy Asset Management unveiled three new cryptocurrency-focused exchange-traded funds (ETFs). This initiative comes amid a trend of investors withdrawing from spot Bitcoin funds, indicating a prevailing market apprehension.
Actively Managed Crypto ETFs
According to Bloomberg, the newly launched exchange-traded funds consist of the SPDR Galaxy Digital Asset Ecosystem ETF (DECO), the SPDR Galaxy Hedged Digital Asset Ecosystem ETF (HECO), and the SPDR Galaxy Transformative Tech Accelerators ETF (TEKX). Trading for these funds is scheduled to commence on Tuesday, as announced by the involved firms.
This collaboration signifies State Street and Galaxy’s entry into a market currently facing considerable outflows from US-listed spot Bitcoin ETFs. Recently, these funds have experienced their longest period of withdrawals, amassing a significant $706 million in outflows.
This pattern highlights a fluctuating risk sentiment among investors, particularly given the mixed economic indicators leading up to this month’s Federal Reserve meeting. Anna Paglia, chief business officer for State Street Global Advisors, commented:
Unlike traditional spot Bitcoin ETFs that hold cryptocurrencies directly, these new funds strive to offer a diversified strategy. They will invest in shares of crypto-linked companies while also incorporating other ETFs that hold physical Bitcoin or futures contracts. Some investors are hesitant about the volatile short-term price movements associated with single-currency crypto. We believe that the next evolution of this market is the advent of actively managed digital asset portfolios.
Bitcoin Market Encounters Historic Outflows
Recent data from September 6 illustrated that net outflows from 12 spot Bitcoin ETFs totaled $170 million, led by Fidelity and Grayscale. Fidelity’s FBTC, for instance, witnessed nearly $86 million in outflows, marking its seventh consecutive session of negative flows.
Grayscale’s Bitcoin Trust (GBTC) has also faced significant losses, with $53 million in recent outflows. Since its inception, GBTC has seen a loss exceeding $20 billion, with $280 million exiting the fund in just eight days.
Other funds, including Bitwise’s BITB and ARK 21Shares’ ARKB, have similarly experienced outflows, indicating a wider trend of declining investor confidence in Bitcoin ETFs, as crypto prices lack substantial catalysts for recovery from the ongoing downturn.
In the past month, the price of Bitcoin has demonstrated considerable volatility, with significant fluctuations, as the largest cryptocurrency reached a one-month low of $52,600 on Friday. However, BTC has since recovered to the $56,740 level, though it remains down 8% over the past two weeks and nearly 6% over the past month.
At this point, it remains uncertain whether improved macroeconomic conditions can act as a catalyst for the BTC price, as well as for the wider crypto market, with the Federal Reserve’s rate cut being pivotal for future movements.
Featured image from DALL-E, chart from TradingView.com
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