06 May 2022 · 3 min read

‘Consistently Strong’ Institutional Crypto Demand Stayed Despite Price Slump – WisdomTree

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Demand for WisdomTree's crypto-backed funds has stayed “consistently strong” through the price slump this year, with professional money managers in Europe among the key players allocating to the space, this asset management firm and exchange-traded fund (ETF) provider has said.

Will Peck, Head of Digital Assets at WisdomTree, told Cryptonews.com in an interview on Tuesday that,

“We’ve seen demand [for crypto-backed ETFs] being pretty consistently strong […] It shows that asset allocators are thinking about [crypto] like any other asset, trying to construct portfolios and allocating to it.” 

Peck explained that investments into the digital asset space are the result of asset managers realizing that crypto represents an uncorrelated asset class that has a potential for “outsized returns.”

Europe – which is WisdomTree’s main focus area for ETFs – is a “pretty institutional market” with many multi-asset managers and family offices active, and “crypto fits their need,” Peck said. With falling prices of both stocks and bonds, crypto as an asset class “certainly has an appeal,” he added.

“I think it’s very encouraging in terms of adoption in the institutional space – you’re seeing people not just trading momentum in the same way – the retail FOMO [fear or missing out] trade – but people are just saying ‘hey, this makes sense’ – whether it is 2, 5, 10 percent of my portfolio – I’m going to continue to allocate according to that,” WisdomTree’s digital asset head said.

WisdomTree’s cryptoasset funds saw inflows of USD 2m in April and USD 12m in March of this year. That compares to a net outflow of USD 25m in April and an inflow of USD 30m in March last year, information published by the asset manager shows.

Further, Peck stated that the company has chosen to intentionally not list any crypto futures-backed ETFs in the US due to the contango effect and “serious performance drag” this leads to for investors. Instead, the firm is focused on Europe, where spot crypto ETFs have been approved in several countries, he said.

Asked about how the regulatory situation might change in the US, WisdomTree’s crypto head said that he does not expect more regulatory clarity to happen “any time soon from Congress,” but admitted that he has been “encouraged by how policymakers are talking about [crypto].”

The Biden Executive Order on crypto was “generally encouraging,” Peck added.

It was feared that the Executive Order would introduce new and strict regulations on the digital asset space, but instead, it focused largely on consumer protection and the need to “reinforce the United States’ leadership in the global financial system.”

“I’m not expecting any kind of negative surprises – at least in the US,” Peck said, before adding that “people should be encouraged by the regulatory dynamic happening right now.”

Peck concluded that,

“There is going to be continued innovation – maybe less of the meme coins that are going up and down, but for those of us that are in it for the long-haul, I’m not sure that’s a bad thing.” 

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