Crypto Market Panic Leads to Significant Investment Product AUM and Volume Declines: ReportDecember 31, 2022
In 2022, cryptocurrency investment products’ assets under management (AUM) and average daily volumes saw a significant decrease due to the current state of panic in the cryptocurrency market after the collapse of FTX and rumors of similar problems at other exchanges.
Average daily volumes have dropped by 74.1% to $203 million in 2022, compared to $781 million in 2021. Average monthly AUM also experienced a similar decrease of 39.5% to $31.9 billion, compared to $52.8 billion in 2021.
According to CryptoCompare’s latest Digital Asset Management Review report, average weekly net outflows from cryptocurrency investment products in December reached a record high of $9.5 million, the highest recorded since June 2022.
In December, the average daily volume of all cryptocurrency investment products kept declining after a slight recovery in November, dropping 56.1% to 61.1 million as of December 20th. The aggregate product volume is currently 87% lower than its peak in January 2021, which according to the firm is suggesting that the bear market is likely to continue into 2023.
Per the report, Bitcoin-focused investment products were the only ones that saw positive inflows, totaling $100,000. It also details that in a letter to investors in December, Grayscale Investments revealed it’s considering returning a portion of its Grayscale Bitcoin Trust (GBTC) funds to investors.
The letter, CryptoCompare adds, came after Grayscale’s request for approval of its Bitcoin exchange-traded fund (ETF) was denied by the Securities and Exchange Commission (SEC). The fund currently manages assets worth $10.5 billion and the discount to the price of Bitcoin has been growing, reaching a record high of 48.9% on December 13th.
The report adds that despite declining volumes and assets under management, Ethereum-based investment products saw “decent gains” in December, with 3IQ’s QETH, XBTProvider’s XETHONE and Purpose’s ETHH seeing performances of 8.5%, 6.5%, and 6.2% respectively. Bitcoin-based investment products QBTC and BTCC meanwhile saw returns of 7.6% and 5.3%.
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