The cryptocurrency market has been on a rollercoaster ride over the past year, with a significant drop in total circulating market capitalization of digital assets. As a result, the performance of digital asset funds has been impacted, with ecosystem-specific funds falling in tandem with cryptocurrencies. However, actively managed diversified crypto funds have performed better, offering some relief to investors.
The last 12 months have been a massive destruction of the value in digital assets. The total circulating market capitalization of cryptocurrencies has dropped from $2.72 trillion on Nov. 11, 2021, to $795 billion on June 18, 2022, eradicating 71% of total dollar-denominated value, or $1.92 trillion.
Total Circulating Market Capitalization of all Cryptocurrencies
Digital asset fund performance reflects this dynamic accurately, as can be expected. Ecosystem-specific funds like the VanEck Avalanche ETN, or the 21 Shares Solana Staking ETP fell in tandem with the underlying cryptocurrencies, while short-selling strategies such as Betapro’s Inverse Bitcoin ETF gained.
More diversified crypto funds with active management did far better. Purpose’s Crypto Opportunities ETF outperformed the best passive cryptocurrency ETF and lost “just” 33.5% instead of VanEck’s Bitcoin ETN, which lost almost 53% of its value.
The largest fund by volume is still Grayscale’s Bitcoin Trust Fund, with $14 billion in AUM.
The cryptocurrency market has experienced a significant decline in the past year, impacting the performance of digital asset funds. While ecosystem-specific funds have fallen alongside cryptocurrencies, actively managed diversified crypto funds have fared better, demonstrating the benefits of a diversified portfolio. Despite the market turmoil, the largest fund by volume remains Grayscale’s Bitcoin Trust Fund. As the crypto market continues to evolve, investors must stay informed and adapt their investment strategies accordingly.
This article is an extract from the 70+ page Institutional Demand for Cryptocurrencies Survey co-published by the Crypto Research Report and Cointelegraph Consulting, written by multiple authors and supported by Flow Trader, sFox, Zeltner & Co., xGo, veve, LCX, Finoa, Lisk, Shyft, Bequant, Phemex, GMI.