Cryptocurrency exchange Traded Products (ETPs) continue to have a record-breaking 2024, according to latest research.
New data, released this week by digital asset and fintech investment firm Fineqia International Inc (CSE: FNQ), showed that ETPs trading in digital assets reached a new all-time high in May 2024.
The research, in which Fineqia studied 194 top international ETPs, showed that ETPs with digital assets as underlying collateral increased their total global Assets Under Management (AUM) to $95.4 billion in May – a new record amount.
The total AUM recorded at the end of May represents a new all-time high for ETPs holding digital assets, surpassing the previous high of $94.4 billion recorded at the end of March.
It also marked an 18% month-over-month increase from $81 billion at the end of April 2024.
Crypto ETPs in 2024 so far
This year-to-date, ETPs holding digital assets have seen a 93% rise in assets under management, up from $49.5 billion at the end of 2023, said Fineqia.
While the Fineqia data suggests that AUM of ETPs holding digital assets has risen by 93% this year-to-date, the digital assets market cap has also increased.
Crypto ETPs’ digital market cap is up by 51%, from $1.77 trillion.
This highlights a premium growth of approximately 82% for ETPs, relative to the underlying assets.
Why have crypto ETPs risen 93% so far?
According to Fineqia, the premium observed in May can be partially attributed to the increasing confidence of market participants concerning the approval of Ethereum (ETH) Spot ETFs.
In May, Ethereum (ETH) saw a 26.8% increase in value, rising to $3,785 from $2,985 at the end of April. During the same period, the AUM of ETH-denominated ETPs increased by 27.9%, reaching $15.3 billion from $12 billion. Year-to-date, ETPs holding ETH have shown a 61.9% increase, while the price of ETH has risen 66.2%.
ETH spot ETFs were confirmed with the approval by the U.S. Securities and Exchange Commission (SEC) on May 23, further boosting demand and positive sentiment around financial products with underlying digital assets.
“Ethereum ETFs are like the second domino in a long line,” said Fineqia’s CEO Bundeep Singh Rangar.
What started with Bitcoin is now carrying on to ETH and paves the way for multiple altcoins to likely be approved as mainstream digital assets in the future. This is already evident in various parts of the world, fundamentally reshaping investment theses.”
This trend is expected to reverse once the SEC approves ETH Spot ETFs for trading, leading to net inflows into financial products holding ETH and mirroring the premium growth observed for ETPs holding BTC.
The start date for ETH Spot ETFs is currently expected in July or August 2024, potentially sustaining demand for digital assets ETPs in Q4 2024, resulting in additional net inflows.
Bitcoin ETPs
Meanwhile, ETPs tracking Bitcoin in particular also surged in popularity once again in May, after a relatively quieter April.
Specifically, the AUM of ETPs with BTC as their underlying asset experienced a 15.9% increase, rising to $73.3 billion from the $63.2 billion recorded at the end of April, according to Fineqia.
This probably was due mostly to the fact that in May, the price of Bitcoin (BTC) rose by 12.3% to $67,150 from $60,150.
However, also in May was the news that BlackRock’s BTC Spot ETF (IBIT) officially surpassed Grayscale’s BTC Spot ETF (GBTC) in total AUM.
This shift reflects the ongoing trend of outflows from GBTC following its conversion from a trust to an ETF, contrasting the robust inflows into IBIT since its inception. By the end of May, both ETFs had more than $19 billion in AUM, with IBIT holding $19.7 billion and GBTC holding $19.2 billion.
Year-to-date, ETPs holding BTC tallied a 106% increase, while the BTC price rose 59.7%. This highlights a 77.6% premium in growth for financial products with BTC as the underlying asset in 2024, aptly demonstrated by the approximately $14 billion in net inflow recorded in BTC Spot ETFs across the U.S.
Diversified, broad-spectrum ETPs on the rise
But crypto ETPs that aren’t just Bitcoin or Ethereum-based have seen a notable rise in popularity too.
Fineqia’s numbers also showed that ETPs representing a diversified basket of cryptocurrencies saw a 20.8% increase in AUM during May, rising to $3.25 billion from $2.8 billion at the end of April.
Year-to-date, the AUM of ETPs holding a basket of cryptocurrencies has risen 44.4%, up from $2.25 billion at the beginning of 2024.
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