- Morningstar Direct data show that crypto ETFs which were launched in the heady days of 2021 just before prices tumbled, account for five of the worst seven debuts in the history of the ETF industry.
- However, the Morningstar analysis also suggest a terrible first year does not necessarily sound the death knell for a fund and that the crypto sector could bounce back as a lot of those involved in the industry have just regathered themselves for the next bull run.
Despite the excitement surrounding a slew of crypto-themed ETFs and initial investor flows, collectively, they have performed far worse than all other ETFs.
Reflecting their volatile nature, cryptocurrency ETFs such as the ProShares Bitcoin Strategy ETF, which holds CME Group’s Bitcoin futures, marked record-breaking flows into an ETF at launch.
But since then, rising interest rates and declining risk appetite have seen flows into crypto ETFs all but dry up.
Morningstar Direct data show that crypto ETFs which were launched in the heady days of 2021 just before prices tumbled, account for five of the worst seven debuts in the history of the ETF industry, despite being the top performers soon after launch.
The worst performer was the France-domiciled Melanion BTC Equities Universe Ucits ETF (FR0014002IH8), which invests in crypto-adjacent companies such as Marathon Digital Holdings, Riot Blockchain and MicroStrategy.
Launched in October 2021, just weeks before global markets peaked, the Melanion offering tumbled 76.9% in the 12 months thereafter.
Across the Atlantic, the ProShares Bitcoin Strategy ETF (BITO), lost a record US$1.2 billion in the 12 months after its eagerly awaited arrival in October 2021, in line with the decline in cryptocurrency prices in 2022.
The U.S.-listed Global X Blockchain ETF (BKCH), Invesco Alerian Galaxy Crypto Economy ETF (SATO) and the First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT) have all seen falls of 76.7%, 73.7 % and 69.4% respectively in their first year of operation.
However, the Morningstar analysis also suggest a terrible first year does not necessarily sound the death knell for a fund and that the crypto sector could bounce back as a lot of those involved in the industry have just regathered themselves for the next bull run.
