Crypto ETFs are seeing more inflows despite sell-off, strategist says
So here to talk about what this means for etfs. We want to bring in tom lydon hes the vice chair of vetify. He joins us now as part of our etf report brought to you by invesco qq tom, its good to see you another day, bitcoin lower once again right around 22 000.. We certainly have seen the selling and bitcoin reflected in some of those crypto etfs. What do you think this means for the space and the wider adoption that people were hoping to see when it comes to crypto, etfs? Well, whats, interesting about crypto etf shawna? Is they really havent been widely adopted? Yet, although we have four that are based by future, so pro shares came out in the fall with the first one and in a matter of days, at 1.3 billion dollars, which was pretty impressive, followed by valkyrie and then also vanek and ultimately uh. Two cream added etfs that were futures based as well. The key is, we dont have a spot, bitcoin etf, yet uh, the chairman of the sec genzler, is not comfortable with it at this point, its only futures based its overseen by the 40 act. So when we look at what investment advisors and individual investors are buying on their brokerage platforms, like the charles schwabs of the world or the fidelities, its still kind of a drop in the bucket, but with that being said, we actually have more money. Thats been going in recently, even though the markets been declining in that space, but because its down about 66 percent, since these uh etfs, launched on a net positive weve, actually seen flows its good news, because we havent seen a motion from those that are buying etfs.
They tend to buy on the dip, whether theyre, individual investors or advisors, then tom, when it comes to getting a spot, bitcoin etf, approved and looking at what the the sec is thinking. Do you think this latest crypto slide gives them more or less impetus to move forward with it faster its going to be tougher because obviously theres less demand so right now i think chair gensler would say: look if you want to buy into the space. Youve got a lot of choices. You can go in with a futures based strategy in the form of an etf. We know gbtc has their strategy, however, its got a discount or you can buy off platform in areas like coinbase, where you can buy directly a lot of folks in lieu of the futures based strategy or in fact a spot strategy are turning to minors and and The minors surprisingly areas like hut 8 and a few others were actually up today, so its interesting. We continue to see people nibbling at this decline, its going to be interesting to see what goes on. I think the key thing, as we survey advisors every year on on bitcoin and cryptocurrency, their interest from their clients continue to rise and advisors. Although they dont have a lot of choices, continue to consult with their clients about it and if they are putting allocations in its small, its something like two to five percent of the overall allocation. So tom, and with that in mind, then what have the fun give us a sense of what the fund flows have looked like in this space, because there certainly was a lot of hype.
Youre saying that people arent ready to allocate a larger amount or a larger portion of their portfolio to this space, i guess a two part question: what has the fund flows look like and what is it going to take in order to get to that bito, which Is the pro shares strategy etf, brought in at its high about 1.5 billion dollars, its about 850 uh? Im, sorry uh, one one. It brought in 1.5 billion right and at its high were now seeing 880 million dollars, so weve also suffered a 66 decline. So if you go in and you look at the flows over time and you put in the decline that weve had in the marketplace, its actually been net positive shares, so uh we havent seen major swings. I think, like we have seen with the selling on spot. Uh cryptocurrencies out there thats a good thing, because what it says is those that are buying etfs tend to be a little bit more rational, maybe not as emotional. I think more and more, as we see crypto being adopted by advisors and investors, who maybe are closer to retirement, who use the more traditional platforms, may be seeing this as a great buying opportunity. You raised a good point about some of these more traditional platforms. You you said that that most investors want to make these crypto allocations on trusted brokerage platforms like a charles schwab and a fidelity, but how much market share do they actually have compared to some of these ones that really cater towards retail investors? Well, youre, youre! Absolutely right there, its just a its just a fraction.
However, i think what we all hope as theres, more trust in cryptocurrency down the road, and hopefully we will see a spot uh bitcoin and other cryptocurrency etfs as the sec and other agencies get more confidence because it is another asset class. We cant avoid that, and there is a demand there and, as more time goes on and theres more adoption, even though theres volatility in the marketplace its an opportunity to diversify all right. We do appreciate you coming on the show this afternoon, tom lyden their vetifies vice chair.