State Street Global Advisors and Galaxy Asset Management have introduced three new crypto-focused exchange-traded funds (ETFs), despite recent heavy outflows from similar investment products.
Newly launched ETFs will start trading on Tuesday, according to a statement.
Galaxy, State Street Introduce 3 Crypto ETFs
State Street Global Advisors and Galaxy Asset Management have launched three new ETFs — SPDR Galaxy Digital Asset Ecosystem ETF (DECO), SPDR Galaxy Hedged Digital Asset Ecosystem ETF (HECO), and SPDR Galaxy Transformative Tech Accelerators ETF (TEKX) — aimed at giving investors exposure to the blockchain industry while managing volatility.
Instead of holding cryptocurrencies directly, these new funds will invest in shares of crypto-related companies and other ETFs that hold physical Bitcoin or Bitcoin futures.
“Some investors are hesitant about the short-term price swings of individual cryptocurrencies. We believe the next step in this market is the introduction of actively managed digital asset portfolios,” said Anna Paglia, Chief Business Officer for State Street Global Advisors.
Read more: How to Invest in Ethereum ETFs?
The DECO ETF focuses on companies benefiting from blockchain and cryptocurrency adoption, such as Bitcoin miners Core Scientific, Hut 8, and Terawulf. It also includes traditional finance companies like Meta and Visa, along with holdings in Fidelity’s FBTC spot Bitcoin ETF.
HECO has a similar portfolio but replaces Meta and FBTC with BlackRock and BlackRock’s IBIT spot Bitcoin ETF shares. To manage volatility, HECO incorporates covered call and protective put options. TEKX targets companies involved in disruptive technologies, including blockchain and artificial intelligence, while also holding some US dollar positions.
The timing of the new ETFs launch is less than ideal. As BeInCrypto recently reported, crypto investment products saw outflows of $726 million last week, the highest since March. Bitcoin (BTC) led the outflows with $643 million, followed by Ethereum with $98 million in withdrawals.
However, today marked the first day of spot Bitcoin ETF inflows after eight consecutive days of outflows, with a modest $28.7 million inflow.
Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach
Bitcoin ETF Inflows. Source: Farside
CoinShares analysts ascribe the negative flows to rate cut uncertainty. This followed last week’s weak jobs report and other US economic data, which left traders and investors cautious about future market conditions.
“This negative sentiment was driven by macroeconomic data from the previous week, which increased the likelihood of a 25 bp interest rate cut by the US Federal Reserve. However, daily outflows slowed later in the week as employment data fell short of expectations. The markets are now awaiting Tuesday’s CP| inflation report, with a 50bp cut more likely if inflation comes in below expectations,” read the report.