Why has the Betashares Crypto Innovators ETF (ASX:CRYP) lost 12% in 10 days?

After a record start, the exchange-traded fund has taken a dive. Here are the details

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The Betashares Crypto Innovators ETF (ASX: CRYP) launched with record success on 4 November.

The exchange-traded fund (ETF) reported $8 million worth of trades within the first 15 minutes of the opening bell.

By the end of the day, CRYP had set new all-time highs for a managed investment on the ASX, finishing its first day with net buys of $39.7 million.

Within 4 trading days, the CRYP share price had gained 11%.

But over the last 10 days, things have gone the other way, with the ETF sliding 12% at the time of writing. That’s despite a 2% intraday gain today.

So, what’s going on?

Why is CRYP down 12% in 10 days?

There look to be 2 interrelated reasons for CRYP’s retracing share price.

First, the price of the world’s top two cryptocurrencies has taken a tumble.

Ten days ago, Bitcoin (CRYPTO: BTC) was trading for US$65,961 (AU$91,611). Today it’s worth US$58,163, down some 12%, according to data from CoinMarketCap.

The world’s No. 2 token by market valuation, Ethereum (CRYPTO: ETH), has also lost ground. Over 10 days Ether has dropped from US$4,725 to US$4,316, down approximately 9%.

That’s the underlying price pressure for CRYP.

What else is seeing the ETF come under pressure?

CRYP doesn’t invest directly in Bitcoin, Ethereum, or any other altcoins.

Instead, the ETF “aims to track the performance of an index (before fees and expenses) that provides exposure to global companies at the forefront of the dynamic crypto-economy”, according to BetaShares.

CRYP currently has 32 holdings. Its top 5 holdings as of this morning are:

  1. Silvergate Capital Corp (12.3%)
  2. Galaxy Digital Holdings Ltd (11.6%)
  3. Marathon Digital Holdings Inc (10.5%)
  4. Coinbase Global Inc (10.0%)
  5. Microstrategy Incorporated (8.6%)

And with the exception of Silvergate, which has seen its share price gain 1% since the closing bell on 12 November, all the other shares are well down.

Galaxy’s share price is down 16% in that time; Marathon’s shares have lost 31%; Coinbase is down 9%, and the Microstrategy share price has slipped 14%.

There will be various reasons for these companies coming under pressure. But the recent losses in the big cryptos are certainly a hefty headwind. And the combination looks to be dragging on the CRYP share price.

Should you invest $1,000 in CRYP right now?

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The Motley Fool Australia’s parent company The Motley Fool Holdings Inc. owns shares of and recommends Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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