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May 16, 2022

Cryptocurrency market maturing as more investment products are approved

By GlobalData Financial

ETF Securities launched Australia’s first cryptocurrency-backed ETFs in May 2022, providing investors with easy access to cryptocurrencies. It is digital asset investment products such as these, launched in global financial centres such as the UK and the US, that will finally move the asset class into the mainstream of investing.

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How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

The crypto investment product market is still in its infancy. At the end of 2021, the digital asset investment product sector was worth $62.5bn, covering such products as crypto-ETFs or hedge funds. In comparison, the total crypto market capitalisation is $1.25trn. Even more impressive, at its peak in November last year it almost broke the $3trn mark. Clearly, it is under-penetrated by asset managers.

However, strong retail demand and the evolving regulatory landscape are set to see the crypto investment product market gain momentum. The Australian regulator only approved exchange-traded products investing in ‘physical’ cryptocurrency at the end of last year, joining Canada, Brazil, and a number of European countries. However, such spot-crypto ETFs have yet to gain approval in the two largest financial centres – the UK and the US.

Approval in these markets would significantly propel growth. Demand is there: the US’ first bitcoin futures ETF launched in October 2021, and it became one of the most heavily traded ETFs ever. Within the first few days, it attracted more than $1bn.

Similarly, in Australia, the ASX ’s first crypto ETF – which launched last year and invests in up to 50 crypto companies, such as Coinbase – hit trading records on its first day of trading, reaching a trading volume of A$8 million ($5.5m) in less than 15 minutes, though its first spot-crypto ETF released in May 2022 to only muted demand. Even so, it shifts the landscape of the crypto market more towards mainstream investors, addressing key concerns.

Chief among these was regulatory uncertainty; the risk of a ban such as China’s sweeping prohibition last year is all too real as the crypto market remains largely unregulated. This combined with security concerns represents a major deterrent for investors. According to Chain Analysis, cryptocurrency crime almost doubled in 2021, reaching $14bn. ETFs overcome this issue. The more regulated nature of share markets reassures investors, and ETFs offer an added layer of security by removing the need to worry about key encryption, custody, and managing wallets. This becomes a problem for the asset manager, which can afford institutional-level security, rather than individual investors.

As more licensed and regulator investment products join the crypto markets, these concerns will recede. Indeed, once the UK and the US join the party, growth is likely to be exponential as even mainstream investors seek exposure to this evolving asset.

Free Report
img

How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

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