Crypto-linked ETFs 2022’s biggest losers with 60% drawdowns

Bloomberg

Crypto-flavoured exchange-traded funds are cluttering the industry’s worst-performing list so far this year.
The six worst-performing, non-leveraged ETFs in the $6.6 trillion arena in 2022 are all crypto-linked equity funds, according to data compiled by Bloomberg. The $63 million Global X Blockchain ETF (ticker BKCH) is the biggest loser with a year-to-date drop of 64%.
While crypto-linked ETFs have swelled in ranks over the past year, performance has been grim. Fading speculative fervour and tightening monetary policy has dragged Bitcoin lower by more than 30% this year, slamming the stocks of public companies involved with digital assets.
The silver lining is that even as the number of funds has ballooned, inflows have been light — minimising the overall blow to portfolios, according to UBS.
“Crypto ETFs have proliferated like crazy over the past year, with more varieties and cheaper fees, but inflows have been miserable,” said James Malcolm, head of foreign exchange and crypto research at UBS. “So I don’t think the overall impact on ordinary people’s portfolios is material. This is still such a niche asset class, and the retail frenzy ended a year ago.”
The $32 million VanEck Digital Transformation ETF (DAPP) is a close second to BKCH with a 63% drawdown, followed by a 62% plunge in $63 million Bitwise Crypto Industry Innovators ETF (BITQ). The First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT), the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) and the Defiance Digital Revolution ETF (NFTZ) all follow with falls of 55% or more.

Bitcoin reclaims $31,000 level
Bitcoin advanced for a third day, rising back above the $31,000 mark, as the risk appetite returned to the US financial markets.
The largest cryptocurrency by market value gained about 5% to $31,438 in New York. Ether increased around 2.8%, while a number of altcoins also finishing in the green — Solana, Avalanche, Cardano were all up as much as 11% as market sentiment improved.
“Bitcoin’s fundamentals and technicals have both been improving over the last few days. Though it may still be premature, some of the more optimistic traders are already calling for a floor on this extended drawdown,” Mati Greenspan, founder of Quantum Economics, told Bloomberg.
BNB, the native token of the Binance blockchain, dropped about 2%. Bloomberg reported that US regulators are investigating whether Binance Holdings Ltd. broke securities rules by selling digital tokens just as the crypto exchange was getting off the ground five years ago, according to people familiar with the matter.
The crypto market could also get a boost from US consumer-price data later this week. If inflation is indeed coming down there’s a good chance the Federal Reserve will ease up on market conditions, explains Greenspan.
Bitcoin has been trading around the $30,000 level for weeks now, defying predictions of a potential further decline but also struggling to gain upward momentum as the broader US market has also taken a beating. Speculative assets like technology stocks and cryptocurrencies are expected to be hit the hardest by the Fed’s plans to shrink its balance sheet, according to the latest MLIV Pulse survey.