Crypto fund trading volume dips to two-year low level globally

The average daily trading volume of global digital asset products or crypto funds in October fell 34.1% to $61.3 million (till 25 October), the lowest since June 2020, according to a report by digital asset data provider CryptoCompare.

Crypto funds are generally preferred by institutional investors to take exposure to virtual digital assets.

The trading volume in October saw the continuation of the downward trend observed since November 2021, except for a slight rise of 0.39% in May. It is the second month since September 2020 in which average daily volumes have fallen under $100 million.

Almost all the crypto products covered in the report recorded a large decline in average daily volumes, ranging from 24.3% to 77.5% in October.

This paints a bleak picture for crypto-based institutional products, as the macroeconomic climate still possesses much uncertainty, said CryptoCompare.

Interestingly, exchange-traded fund (ETFs) products from Canada-based Purpose Investments Inc saw a spike in trading volume with Purpose Bitcoin ETF (BTCC) and Ether ETF (ETHH) increasing by 298% and 172%, respectively.

The crypto markets rebounded in October in hope of a less aggressive stance from the Federal Reserve after two consecutive months of decline, with Bitcoin (BTC) and Ethereum (ETH) rising 3.38% and 9.90% (as of 25 October), respectively.

This was also reflected in digital asset products with the assets under management of Bitcoin and Ethereum-based products rising 2.55% and 3.35%, respectively.

Bitcoin-based products had mixed results in the last 30 days, with returns ranging from -4.7% to 2.7%. This contrasts with Ether products, which had returns ranging from -22.1% to 0.8%, despite ETH/USD experiencing returns of 9.91%.

Institutional preference for bitcoin-based products in October is also shown through average weekly flows by asset class. BTC products experienced weekly inflows of $8.37 million, while ETH products experienced outflows of $5.03mn. This may be caused by the uncertainty surrounding the macroeconomic climate, as investors look to invest in safer crypto-based products.

In October, the total AUM across all digital asset investment products rose 1.76% to $22.9 billion (as of 25 October). This is the first increase in AUM since July this year, however, AUM is still significantly lower than what was seen at the market’s peak in March.

This month, the AUM of Bitcoin-based digital asset products rose 2.55% to $16 billion, increasing its market share to 69.6%. Meanwhile, the AUM of Ethereum-based digital asset products rose 3.35% to $5.68 billion, now accounting for 24.8% of the total AUM. The AUM of other cryptos and basket-based products fell 8.62% and rose 1.12% to $942 million and $346 million, respectively.

Grayscale products continued to represent the vast majority of AUM at $17 billion (74.1% of total), followed by those of XBT Provider at $1.30 billion (5.66% of total) and 21Shares at $931 million (2.77% of total).