The S&P/ASX 200 Index (ASX: XJO) has finished the day down 0.57% . But one ASX exchange-traded fund (ETF) that investors might not have expected to fall today has done a lot worse. The BetaShares Crypto Innovators ETF (ASX: CRYP) barrelled towards the end of the day. This CRYP ETF finished the day down 4.99%, sitting at a unit price of $11.24.
That might come as a surprise to some investors. Since this ETF floated on the ASX just one week ago today, it had doled out some very impressive gains. In addition, it also managed to break the ASX record for the highest trading volume for a newly-listed fund within its first few hours of life.
As of Tuesday's close, CRYP units hit a price of $12.38, meaning they were up more than 10% since its ASX debut mere days beforehand. Today's nasty drop erases much of those gains, and puts CRYP unitholders back at the rough prices this ETF was asking on its first day of trading. Not quite square one, but getting close.
So what has caused this dramatic reversal of fortunes for this new and exciting ETF?
CRYP ETF gets pulled back to earth
Well, to answer that, let's check out what's been going on with CRYP's underlying holdings. Like most ETFs, CRYP holds within it an underlying basket of shares. In this ETF's case, these shares are selected to give investors "exposure to global companies at the forefront of the dynamic crypto economy".
So, according to the provider, CRYP's current top 5 holdings are as follows:
- Marathon Digital Holdings Inc
- Galaxy Digital Holdings Ltd
- Silvergate Capital Corp
- Coinbase Global Inc
- Microstrategy Incorporated
As it happens, all five of these US-based companies (with the exception of Canada's Galaxy Digital) had big falls in their valuations overnight (our time) on the US markets. And they weren't small drops either. Galaxy Digital and Marathon Digital each fell by close to 15%. Silvergate fell by 7.3%, while Microstrategy was down close to 5%. These moves might have been prompted by Coinbase reporting its quarterly earnings, upon which Coinbase shares crashed 8%.
All this is despite the fact that cryptocurrencies themselves (which the CRYP ETF does not directly invest in) remain at elevated pricing. Indeed, Bitcoin (CRYPTO: BTC) just hit a new all-time high yesterday, although it has fallen by around 6% since then.
This ETF's provider BetaShares does warn that "an investment in CRYP should be considered very high risk". Today proves just why.
