Crypto investment product trading volumes decline for 6th month as investors seek direct exposure

Although the cryptocurrency market has received significant attention from traditional investors in the form of crypto investment products like exchange-traded funds (ETFs) and exchange-traded notes (ETNs), data shows the trading volumes of these products have recorded a steady decline.

Indeed, the average daily trading volumes across different crypto investment product types fell about 16.3% from March to April – to $244 million, according to the latest Digital Asset Management Review by crypto analytics platform CryptoCompare published on April 28.

As per the report, April is the sixth consecutive month recording a decline in trading volumes. Overall, crypto investment product trading volumes have fallen 71% since October 2021, when they stood at $841 million, and 83.8% since the all-time high of $1.51 trillion they reached in January 2021.

Dipping investment products volumes = increased interest in direct exposure?

Furthermore, the report also adds that:

“Trading volumes on centralised exchanges have also weakened over the last six months, as quoted in our monthly Exchange Review. However, the decline in digital asset investment product volumes is more severe, suggesting market participants have moved further away from these products in preference for more direct exposure to crypto assets.”

In other words, traditional investors seem to be increasingly seeking more direct access to digital assets, despite crypto investment products allowing them to trade these assets on traditional stock exchanges, without the complexities of custody and storage.

As for specific investment products, Grayscale’s Bitcoin trust product (GBTC) has retained its position as the highest traded trust product in April, with average daily volumes of $104 million, although dropping by 17.3%. 

Among ETFs and ETNs, ETC Group’s BTCE product recorded the highest daily volume in April, despite a drop of 21.4%, to $16.4 million. As for exchange-traded certificates (ETCs), Valour’s Bitcoin product (BTCZERO) performed the best, with $4.24 million, down 35.6%.

Meanwhile, a recent study has found that 80% of institutional and 54% of retail investors believe that cryptocurrencies as an asset class will overtake traditional investment vehicles in the next decade, as Finbold reported.