Crypto: Once High-Flying Crypto Funds Are Getting Little Investor Attention

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New York: The cryptoverse has already had what appears to be a lifetime of ups and downs this year, but activity in industry-related products has been nearly non-existent, with analysts saying investors have abandoned the sector without plan to come back anytime soon.

Nearly $172 million has exited global exchange-traded products, following everything from Bitcoin to Cardano, in the first six months of 2023 amid an industry-wide rally, following outflows from just $37 million in 2022. That compares to record cash inflows of nearly $10 billion in 2021 and $6.7 billion in 2020, according to Bloomberg data.

It’s another sign that investors have fallen in love with the once high-flying sector, where prices are – despite resurgence of more than 50% this year for Bitcoin – still well below their 2021 highs. of the investor base – the one that was excited during the pandemic years – has proven fleeting: many, burned by last year’s multitude of scams and corporate meltdowns, are still nursing those wounds.

“Crypto doesn’t have the same mass appeal it has in 2020 and 2021,” said Roxanna Islam, associate director of research and head of sector and industry research at VettaFi. “Investors who were previously burned by falling prices and market volatility may have already exited the market late last year, and with Bitcoin prices hovering below $30,000 in recent months, there hasn’t been enough excitement to attract new investors.”

Crypto has been, since last year’s collapse of a number of industry titans, including the FTX exchange, undergoing a drastic transformation. Regulators have cracked down, accusing popular platforms of operating illegally. Prices are still in the gutter – on Monday, Bitcoin was trading around $25,800, 60% below its 2021 all-time high of nearly $69,000. This is after a 56% rally this year. In this environment, crypto trading volumes have also plummeted, meaning any price swings may seem more pronounced through thin trading. Spot volumes in May recorded the lowest monthly reading since March 2019, according to CCData.

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