Despite high YTD returns for crypto ETFs, many investors stay on the sidelines

Some investors burned in 2022 might not yet be willing to jump back into the space, while others likely “waiting on the sidelines” for a spot bitcoin ETF


matimix/Shutterstock modified by Blockworks


Though crypto-related ETFs have notched better year-to-date returns than virtually every fund segment, investors appear to be wary of such products. 

The Valkyrie Bitcoin Miners ETF (WGMI) has returned 196% so far this year, according to VettaFi’s ETF Database — ranking fifth across all ETFs, crypto-related or otherwise.

Yet WGMI’s assets under management remain relatively low at $21 million, despite tripling in size since Jan. 1. 

But a more striking example, perhaps, is the Invesco Alerian Galaxy Crypto Economy ETF (SATO), which has only attracted about $5 million in assets since launching in October 2021. That fund is up 151% year to date, VettaFi data shows, good for 12th-best among all ETFs.

Invesco, a fund giant known for its Nasdaq 100-focused QQQ ETF, manages neary $1.6 trillion in assets. It partnered with crypto firm Galaxy in 2021, noting its strategy to team up with “subject–matter experts.” But neither the combination of an ETF giant and crypto-native firm, nor the performance, has attracted investors.

Meanwhile, the largest crypto equity ETF, the Amplify Transformational Data Sharing ETF (BLOK), lost assets despite year-to-date returns of 51%.

Read more: Inside BLOK ETF: ‘We use the miners to play offense and defense’

BLOK, which has roughly $500 million in assets, saw net outflows of about $85 million in 2022 and has lost another $26 million in assets so far in 2023.

The ProShares Bitcoin Strategy ETF (BITO) — a fund that holds bitcoin futures contracts, not crypto-related equities — has been an outlier of sorts. Returning about 70% so far this year, it has net inflows of $325 million since the start of 2023. Its assets under management are nearly $1.1 billion, higher than any other US crypto ETF.  

More than just performance

Strong performance over a relatively short period of time isn’t enough to drive money into ETFs, according to Sumit Roy, senior analyst at The exception, he added, is if there is “a convincing narrative” that compels investors to buy.

“Right now, we don’t have that; in fact, it’s the opposite,” Roy told Blockworks. “Many investors are wary that regulation might hurt the stocks within these funds, and they’re worried that cryptocurrency prices will stay depressed.”

Common top-10 holdings in funds such as WGMI, SATO and BLOK include bitcoin miners CleanSpark, Marathon Digital and Riot Platforms. The SEC sued Coinbase, a top stock in SATO and BLOK, in June. 

Though BTC is up roughly 72% year to date, it is down more than 5% in the past month and down nearly 60% from its all-time high reached in November 2021.

Neena Mishra, director of ETF research at Zacks Investment Research, said crypto ETFs have benefitted from the rebound of crypto prices as well as hype around artificial intelligence.

But some don’t want to get burned again, she added. 

“Crypto-related funds were among 2022’s worst performers,” Mishra told Blockworks. “Many investors who lost a lot of money simply gave up on the asset class.”

BLOK’s total return in 2022 was about -62%, according to

Funds tied to commodities, alternative energy and tech have historically delivered strong returns, only to see limited interest from investors because those investors were hurt by previous crashes, Roy noted.

Others, such as the Breakwave Dry Bulk Shipping ETF (BDRY), surged more than 280% in 2021, but did not see much interest from investors, Mishra recalled. BDRY was too volatile for some investors, she added, and some did not fully understand the theme.

“That doesn’t mean that we will never see inflows into these [crypto] ETFs, though,” Roy said. “If the funds keep rallying and cryptocurrency prices near their highs or make new highs, then the narrative could shift and money could start pouring in.”

The elephant in the room

Hopes for spot bitcoin ETFs have been “a double-edged sword” for US crypto-focused ETFs, Mishra said. 

Roy noted that “money could be waiting on the sidelines” for a spot bitcoin ETF amid “growing excitement” that one could launch soon.

Such approval hopes became higher, for some, after asset management titan BlackRock entered the race to launch such a product in June. 

The exchanges that would list the latest wave of proposed US bitcoin ETFs have sought to address SEC concerns by noting in filings they have “reached an agreement on terms” with Coinbase to enter into a surveillance-sharing agreement (SSA).

Though the SEC delayed its decision on a proposed ETF by Ark Invest and 21Shares last week, the regulator has a slate of others to rule on — or say it needs more time to review — in the coming weeks. 

“While all crypto-related assets have benefited from the rising odds of approval of spot ETFs, many investors are now simply waiting for pure exposure rather than investing in related ETFs,” Mishra said.

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