Bitcoin’s Bearish September Has Kneecapped Crypto ETP Activity: Report

Sep 25, 2020 at 14:25 UTC

Bitcoin’s bearish price performance this month has prompted investors to pull out of some crypto derivatives products, with trading volumes taking a nosedive as a result.

A CryptoCompare report published Thursday shows volumes for cryptocurrency-based exchange-traded-products (ETPs) have fallen to a fraction of what they were in August.
Average daily volumes have fallen 75% from $186.5 million in mid-August to just $48 million by the middle of September, the firm wrote.

The slump was experienced across the board with product providers in both Europe and North America, including Deutsche Boerse XETRA, feeling the pinch.
August had been a record month for crypto derivatives generally, as CoinDesk reported at the time.
CryptoCompare’s report doesn’t include volumes from products that run on unregulated derivative providers, such as BitMEX or Binance.

Market leader Grayscale saw volumes for its Bitcoin Trust fall to just $40 million a day (pictured above).
Its Ethereum and Ethereum Classic products have lost nearly 65% of their value since June, something CryptoCompare puts down to waning interest among investors.
Grayscale is part of Digital Currency Group, CoinDesk’s parent company.
Crypto derivatives track the price performance of selected digital assets, usually bitcoin, through a product that’s tradeable on regulated stock exchanges.
As such, they are popular with investors who want to gain exposure to the digital asset market through a traditional instrument.
Constantine Tsavliris, CryptoCompare’s head of research, told CoinDesk investors may have been put off as bearish market sentiment grew.
In the first week of September, bitcoin fell from $12,000 to $10,000, but has since recovered to trade around $10,613 at press time, according to CoinDesk data.
But negative feelings still pervade the market. The Fear and Greed Index, a consolidated sentiment tool for digital assets, is currently at 46, suggesting traders are still mildly bearish.
“ETP investors generally invest long-term, and therefore the recent drop in price combined with a generally bearish market has likely encouraged more cautious trading activity,” Tsavliris said.