Crypto-Linked ETFs Report 60% Net Loss So Far In 2022: Will Investor Confidence Ever Return?

According to Bloomberg, as of June 6, crypto-linked equity funds lead the list of the largest negative returns across the entire category of non-leveraged ETFs.

What Happened: The six non-leveraged ETFs with the greatest losses, ranging up to negative 64% YTD, are linked with cryptocurrencies. The different funds varied in their returns, with Global X Blockchain ETF BKCH at a negative 64% return, VanEck Digital Transformation ETF DAPP at a negative 63% return, Bitwise Crypto Industry Innovators ETF BITQ at a negative 62% return.

Following the aforementioned, Defiance Digital Revolution ETF NFTZ, Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF RIGZ, and First Trust SkyBridge Crypto Industry And Digital Economy ETF CRPT also showed losses of over 50%.

Why It's Important: The extent of the drawdowns across these ETFs is indicative of the overall trend of the crypto market, and the U.S. economy overall. Falling confidence in cryptocurrencies, is in alignment with the overall drop in the prices of cryptocurrencies, thus depleting the returns from these ETFs.

However, despite there being numerous new crypto-linked ETFs emerging, due to the actual inflows into these ETFs being marginally small, Bloomberg reports the overall portfolio impact of these drawdowns for investors has been minimal.

Also Read: Here's The Bull, Bear Case For Ethereum Classic As The Crypto's Range Tightens

What’s Next: As the future sentiment of the crypto markets remains uncertain, with an overall downtrend over the past few months, it is unlikely that the confidence of retail investors in crypto-linked ETFs will be restored. However, once the crypto industry returns to its bullish sentiment, investor faith in this sector may return, leading to significant inflows of capital and price recovery.