Invesco, the $1.4 trillion 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 ETFs for Europe, Middle East and Africa at Invesco, told Financial News.
“It has stopped some level of participation in cryptoassets, but I don’t think it has stopped the recognition of most of the large institutions that 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. The launch of Invesco’s Bitcoin ETP came two years after it introduced its blockchain ETF, which has since grown to $590 million in assets.
Despite increased demand among institutional investors for exposure to digital assets, the flow of new money into the products this year has slowed as a result of the crypto market crash, or “crypto winter.”
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According to data from CoinShares, digital assets have raised $492 million in net flows globally since the beginning of this year, a significant decrease from the $6.5 billion they received during the same period in 2021.
“While there have been very few asset flows, we will see people move back into this space as we move back to a more consistent volatility path,” Buxton said.
“As we move out of crypto winter into crypto spring, we will be well positioned.”
Buxton added that the structure of Invesco’s bitcoin ETP, which uses a similar valuation model to its gold ETF, could be extended to other cryptocurrencies in the future.
“Once we have more growth in the digital space, that will drive the next evolution of product development, such as building multi-digital asset models,” he said.
Other asset managers have launched dedicated crypto products based on strong demand from large professional investors, including Fidelity International, which launched its physical bitcoin ETP in Europe in February.
Fidelity Digital Assets, the crypto-asset group of US-based Fidelity Investments, which saw a more than 1,800% increase in UK revenue last year, is acting as 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 largest clients trade bitcoins through its Aladdin platform.
The partnership comes after BlackRock CEO Larry Fink said in March that the firm was 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 acquired a minority stake in Forteus, the asset management arm of Swiss firm Numeus Group.
However, the crypto market crash, caused by the collapse of the stablecoin terraUSD and its cryptocurrency luna, has wiped billions off the market.
The total market now stands at about $1.3 trillion, down from a peak of $2.9 trillion in November.
The downturn has also resulted in some high-profile casualties, 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 comments or news, please email David Ricketts
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