Invesco, the $1.4 billion US asset manager that launched one of Europe’s first bitcoin products, predicts a “crypto spring” will spur professional investors back into digital assets.
“We’ve been in crypto winter, with very volatile prices,” Gary Buxton, head of Europe, Middle East and Africa ETFs at Invesco, told Financial News.
“It has stopped some level of participation in cryptoassets, but I don’t think it has stopped the recognition by most large institutions that they will play an increasingly important role in the future.”
Invesco announced its foray into the European crypto market in November with the launch of a physical bitcoin ETP. The product, which has amassed $69 million in assets, aims to deliver the price performance of bitcoin – the world’s most popular crypto asset. Invesco’s bitcoin ETP launch came two years after it unveiled its blockchain ETF, which has since grown assets to $590 million.
Despite growing demand among institutional investors to gain exposure to digital assets, the flow of new money into products this year has slowed as a result of the crypto market, or “crypto winter.”
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According to data from CoinShares, digital assets have collected $492 million in net flows globally since the beginning of this year, a significant decrease from the $6.5 billion they pulled in during the same period in 2021.
“While there has been very little or no asset flows, we will see people come back into that area as we return to a smoother volatility path,” Buxton said.
“When we come out of the crypto winter into the crypto spring, we will be well positioned.”
Buxton added that the structure of Invesco’s bitcoin ETP – which uses a similar valuation model to gold ETFs – could be expanded to other cryptocurrencies in the future.
“Once we get more growth in the digital space, that will drive the next evolution of product development, such as the creation of multi-digital asset models,” he said.
Other asset managers have rolled out dedicated crypto products amid strong demand from large professional investors, including Fidelity International, which in February launched its physical bitcoin ETP in Europe.
Fidelity Digital Assets, the cryptoassets arm of US-based Fidelity Investments which last year recorded a more than 1,800% increase in UK revenues, acts as the custodian for the product.
Growing investor interest in digital assets has prompted several other asset managers to take action.
BlackRock, the world’s largest asset manager, recently announced a tie-up with crypto exchange Coinbase – a move BlackRock said would help some of its biggest clients trade bitcoin through the Aladdin platform.
The partnership came after BlackRock CEO Larry Fink said in March that the firm is looking at how digital assets and stablecoins can be used to help its clients.
Meanwhile, UK-listed Schroders announced in July that as part of its push into digital assets, it had bought a minority stake in Forteus – the asset management arm of Swiss firm Numeus Group.
However, the crash in the crypto market – prompted by the collapse of stablecoin terraUSD and its paired cryptocurrency luna – has removed billions from the market.
The total market now hovers around $1.3 billion, down from a high of $2.9 billion in November.
The fallout has also claimed some high-profile victims, with industry players such as Celsius and Voyager Digital filing for bankruptcy. Meanwhile, Coinbase announced plans to cut thousands of jobs.
To contact the author of this story with feedback or news, email David Ricketts
