Betashares CRYPTO ETF (ASX:CRYP) drops 16% in the past week. What's next?

Most cryptocurrencies sold off alongside risk assets over the past week.

| More on:
ETF written in red across three piggybanks.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Betashares Crypto Innovators ETF (ASX: CRYP) is a newcomer to the ASX.

When CRYP hit the boards on 4 November, the exchange traded fund (ETF) broke all the records for a managed investment fund on its first day of ASX trading, finishing with net buys of $39.7 million.

While the early days delivered some handsome gains to investors, CRYP has struggled over the past week.

Why is CRYP down 15% this past week?

At this morning's opening bell, the ETF was down 18% over the past week. With today's intraday gain of 4.14%, the CRYP share price still remains 16% in the red.

So what's going on?

Part of the answer lies in the falling price of the world's top cryptocurrency.

Bitcoin (CRYPTO: BTC) sold off alongside other risk assets this past week, and remains down 13% over the past 7 days. One Bitcoin is currently worth US$50,501 (AU$72,141), according to data from CoinMarketCap.

Bitcoin is up 3% in the past 24 hours, however, likely tying into the lift in the CRYP share price today.

The other part of the puzzle lies in the fact that the ETF doesn't invest directly in Bitcoin or indeed in any altcoins.

Instead, the ETF works to track the performance of an index of companies deeply involved in crypto activities.

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

  1. Silvergate Capital Corp (12.3%)
  2. Marathon Digital Holdings Inc (10.3%)
  3. Coinbase Global Inc (10.2%)
  4. Galaxy Digital Holdings Ltd (9.9%)
  5. Microstrategy Incorporated (9.5%)

A quick review of the above companies' share price performance over the past week reveals they're all deeply in the red, down anywhere from 15% to as much as 20%.

So, now we know why CRYP was down 18% at market open this morning, and remains down 16% over the past week.

But what can ASX investors expect in the year ahead from the ETF.

What's next for the crypto ETF?

The performance of CRYP, as we looked at above, is linked to the performance of the crypto-related companies that the ETF invests in. And the performance of those companies, in turn, is closely tied to the performance of Bitcoin and the wider world of altcoins.

So what's ahead for 2022?

For some insight into that question, we turn to Josh Gilbert, crypto analyst at multi-asset investment platform eToro.

According to Gilbert:

2021 was a remarkable year for cryptoassets, from the retail surge in Q1 with new all-time highs to market corrections and new all-time highs in Q4. Global adoption of cryptoassets is accelerating at an extraordinary pace and we can expect this trend to continue well into 2022.

Looking ahead to what could spur Bitcoin and other cryptocurrencies onwards in 2022, Gilbert added:

DeFi [decentralised finance] is anticipated to play a more significant role than we've ever seen before, with the continued growth from NFTs [non-fungible tokens], the metaverse and Web 3.0. Although some of these trends may take a while to reach their full potential, 2022 will certainly act as a sounding board for their acceleration.

DeFi, among other things, can deliver smart contracts via cryptocurrency blockchains.

The growth of smart contracts, Gilbert said, "could help to facilitate more innovative shipping and logistics processes, and merchants could have the ability to sell to customers in more countries with less friction".

Gilbert also drew a parallel to the past 2 bull runs for Bitcoin and other cryptocurrencies, saying the current bull market looks to have some legs left in 2022. Which would offer some steady tailwinds for the CRYP share price.

According to Gilbert:

In 2013 and 2017 we saw crypto bull markets and have now experienced this again in 2021. Nevertheless, I don't think we've yet to see the dramatic price action we saw during these periods. If history is anything to go by, this could mean that we haven't quite seen the peak for crypto yet and 2022 could be a key year.

In a nod to the historic volatility of cryptocurrencies, Gilbert added, "In the same breath, investors should remember that we may then experience a 'crypto winter'."

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended 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.

More on ETFs

Man holding Australian dollar notes, symbolising dividends.
ETFs

Want the latest dividend from the Vanguard Australia Shares ETF (VAS)? Here's what you have to do

If you want to bag the latest VAS dividend, here's what you need to do.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
ETFs

Why these ASX income ETFs could be top options

Here's how investors can use ETFs to generate income.

Read more »

ETF written on cubes sitting on piles of coins.
ETFs

2 rewarding ASX ETFs I'd buy to build a second income

There are a few different ETFs that can provide good dividends. Here are two.

Read more »

A young man wearing glasses writes down his stock picks in his living room.
ETFs

The pros and cons of buying the iShares S&P 500 ETF (IVV) right now

It’s important to ask the question of whether it’s a good time to buy.

Read more »

A graphic illustration with the words NASDAQ atop a US city and currency
ETFs

How much would I have now if I'd invested $10,000 in the BetaShares Nasdaq 100 ETF (NDQ) a year ago?

Was it a good idea to buy this ETF a year ago?

Read more »

young man smiling in blue shirt
ETFs

Invest $500 in these outstanding ASX ETFs

Could these ETFs deliver the goods for investors over the long term?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
ETFs

Buy and hold these ASX ETFs until 2034

These ETFs could be great long-term options. Let's see why.

Read more »

ETF on white blocks with a rising arrow on top of coin piles.
52-Week Highs

12 ASX ETFs breaking the mould to hit 52-week highs today

What a day for ASX ETF investors!

Read more »