Reddit Traders Regret Crypto Stock ETF

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Its decline in part reflected the price of bitcoin – which has fallen 15.8% over the past month and to which all of the ETF’s underlying holdings are exposed, to varying degrees.

However, some of the fund’s unitholders – many of whom dipped their toes into investing in cryptocurrency for the first time – reacted emotionally to the sale, taking to social media to express their regret. have invested in the high profile ETF.

“I’m watching a lot of my savings pool by buying this and it freaks me out,” a concerned investor told the r / Ausstocks forum on social network Reddit.

It will be back in full swing in no time. No stress, mate.

– Reddit user “empathy_par times”

“I’m scared so much of my money just disappears [sic], said another. “Guess I wasn’t ready to see it drop 12% after the purchase. I wish I hadn’t invested in this and I’m trying to resist the panic sell.”

Another said he sold his holdings in CRYP, crystallizing a small loss before seeing it collapse in the following weeks. “I’m glad I got out of this,” the Reddit user said.

Others have told their anxious peers that they should have expected losses in the short term, given the fund’s exposure to the risky and nascent digital asset market.

“If you haven’t prepared for the volatility or the potential for crypto to be in a bubble and about to burst, then maybe you should invest in a less risky game,” replied one of the. them.

Using the synonym ’empathy_sometimes’ one user said,’ It will be back in full swing in no time. No stress, mate.

The value of CRYP unit sales ($ 99.3 million) has exceeded the value of purchases ($ 68.4 million) since the fund was listed, according to Bloomberg data. Brokers associated with retail investors such as CommSec, CMC Markets, OpenMarkets and Finclear (which settles and clears Superhero) have collectively sold approximately $ 18 million of CRYP shares.

“Disappointment is common”

Chris Brycki, ETF market analyst and founder of robo-adviser Stockspot, said CRYP has shown shocking volatility for an ASX-listed ETF, but investors should expect it to perform better like turbulent crypto markets.

“The ETF has tracked the price of bitcoin lower for the past two weeks as the companies it invests in rely on bitcoin and crypto prices,” he said.

But he added that Stockspot’s research suggests that so-called thematic ETFs are often programmed to take advantage of a market spike in their respective niche.

“They tend to go out… when retailer interest is already at its peak,” Brycki said. “Post-launch disappointment is common. “

This is the case with CRYP, whose underlying index rose nearly 90% from mid-July to mid-November (just after launch), before falling almost 25%.

Alex Vynokur, managing director of BetaShares, the provider of CRYP, said that one month was not a sufficient period to judge the performance of an ETF – a statement with which a number of market experts have agreed. .

“At all times, we have made it clear that CRYP is a high risk investment and should be viewed as a small component of a diversified portfolio,” said Mr. Vynokur. “As a general rule, investors should take a long-term view when making investment decisions about their portfolios; it’s no different for exposure to digital assets.

The product briefs, viewed by the Australian Financial Review, warned potential investors that an allocation to the fund should be considered “very high risk” and described the companies it owns as susceptible to risk. ” be subject to a “very high level of return volatility”.

Mr Vynokur added that a “regulated ETF structure” has inherent consumer protection advantages over investing in crypto assets directly through an unregulated exchange. The comments came as the local exchange MyCryptoWallet went into administration.

But an investment industry figure, who declined to be named, said BetaShares should take some responsibility for the emotional reaction of loss-making unitholders. “I think they’ve overdone it,” he said.

A number of fund managers, including BetaShares, are rushing to launch the country’s first ETF to invest directly in bitcoin and ether, the two largest digital currencies by market cap.

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