Valkyrie Investments announced on Tuesday that it surpassed $1 billion in assets under management (AUM), partly underscoring the tepid recovery of the volatile cryptocurrency market after a sharp fall-winter fall.
Admittedly, digital tokens are a far cry from the peak of the crypto market in the fall, when Bitcoin (BTC-USD) hit a new all-time high near $69,000, but Valkyrie’s announcement showed how some crypto asset managers position themselves. to survive the circular saw action.
“From individuals … to family offices, pensions and endowments eagerly allocated to hedge funds and trusts, our industry has a solid foundation on which to continue to grow through the remainder of this year and beyond,” said Valkyrie CEO Leah Wald in a press release.
The company launched its Strategy Bitcoin Fund (BTF), the second SEC-approved Bitcoin exchange-traded fund (ETF), in late October, the company now runs two other “bitcoin-adjacent” ETFs.
With about $46 million in assets under management, the ETF side of Valkyrie’s business accounts for a marginal 5% of its bottom line, according to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.
The remaining 90% of Valkyrie’s total assets come from custom-created Separately Managed Accounts (SMAs), six different crypto protocol trusts for accredited investors, as well as overseeing a managed decentralized finance-focused hedge fund. by former Tom Brady business manager.
Currently believed to be completing its Series B raise, Valkyrie Investments has made a name for itself in the bitcoin ETF category.
Cryptocurrencies are still down more than 32% from $2.92 trillion to $1.98 trillion, according to Coinmarketcap.com data, after falling in recent weeks amid fears over the monetary policy stance. Meanwhile, investors buying ETFs around the time Valkyrie launched its ETF are likely underwater.
Although the company’s ETF assets may seem small compared to their competitors, Bloomberg’s Balchunas recognize how important it is for crypto ETF issuers to claim the budding financial product line early. He suggested that eventually the digital asset ETF category “will be massive.”
Based on data from Cerulli Associates, Balchunas pointed out in a report last week that a 2-3% crypto ETF allocation of the total advisor market could lead to a trillion-dollar inflow into crypto ETFs. over the next five years.
But in addition to crypto’s rollercoaster price action, regulation is proving to be a major hurdle for many US financial advisors. According to a investigation last month from digital investment manager Bitwise, only 15% of advisers said they had allocated client portfolios to crypto in 2021. The vast majority of these respondents cited “regulatory uncertainty” and preference for an ETF bitcoin spot, which has not yet been approved by the SECOND.
David Hollerith covers cryptocurrency for Yahoo Finance. follow him @dshollers.
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