As the “entrance” investment products into the risky asset market, ETFs (Exchange Traded Funds) have not escaped the disastrous period that the ecosystem went through last year. At B3, 13 ETFs are available with exposure to cryptocurrencies, from traditional bitcoin and ethereum to decentralized finance (DeFi), smart contracts, metaverse development platforms and NFTs, the non-fungible tokens that were buzzing in early 2022.
Of those 13, only five launched in 2021, a year marked by the record price of bitcoin – at $68,000 – and a market in excess of $3 trillion. However, a year later, bitcoin fell to just over $15,000, in November, and ended the year just above that level, suffering a 65% drop in its value.
Negative profitability for these five ETFs accompanied the assets they are exposed to, primarily bitcoin and ethereum, and ended last year with declines of between 56% and 58%, respectively.
Even with a negative macroeconomic and industry scenario, in 2022, the launch of ETFs remained hot, but emphasized the fundamentals of concepts characteristic of the cryptocurrency ecosystem, especially decentralized finance (DeFi) and smart contracts (smart contracts).
In February, Hashdex and QR division managers launched their DeFi-focused products, DEFI 11 and QDFI11, respectively. In March, WEB311 started trading from Hashdex, with assets from the smart contract platform. The following month, Investo released its own NFTS11.
In May, the month the TerraLuna project opened crash season in the ecosystem, Vitreo (now Empiricos) launched CRPT11, with a basket of the world’s top 20 crypto assets. In June, Investo once again strengthened its presence in the sector with the launch of BLOK11, also a smart contract. In the same month, Hashdex launched META11, focusing on metaverse developers.
At the end of the year, Itaú entered the bid with BITI11, with exposure to bitcoin, in November, when the North American stock exchange FTX, one of the largest in the world, went bankrupt, with suspicions of fraud and misuse of funds from your clients.
Despite the market downturn and with the first signs of price recovery appearing this year, managers and analysts point to the diversification of cryptocurrency assets and thematic products, which could become even more powerful, in contrast to the speculative movement that cryptocurrencies experienced until the fateful year 2022.
“Although Bitcoin is 14 years old, the cryptocurrency market itself has been around for just over five years, opened up by the Ethereum network and its potential to ‘create’ new cryptocurrencies,” notes Erich Marinelli, asset analyst. encoded in Genial.
Marinelli recalls that the creation of bitcoin was a response to the 2008 financial crisis, it gained many fans, and since then, has recorded extremely high profitability. With the exception of a few periods of significant fluctuations, such as at the beginning of the COVID-19 pandemic, the currently largest cryptocurrency by market capitalization “has seen only a positive macroeconomic scenario.”
Bitcoin price bottomed out [preço mais baixo] In March 2020, however, liquidity injections by central banks and interest rate cuts to deal with the economic crisis caused by the pandemic, led to a very strong expansion of the cryptocurrency market, as well as other risky assets, such as stocks, ”Marinelli notes. But the bill for the law arrived, With inflation soaring, interest rates soaring, and deflationary monetary policies in the past year, for the first time, there has been a reaction in the cryptocurrency market to a more complex macro scenario.”
Added to this context are specific episodes in the ecosystem, such as the collapse of the TerraLuna project and the FTX exchange, which led to new lower prices, which reinforces the Genial Analyst.
“The cryptocurrency market has undergone a very severe correction, persistent inflationary pressures, and adverse geopolitical dynamics posed a difficult scenario for risky assets,” reiterates Alexander Ludolph, Chief Investment Officer at QR Asset. However, due to sector volatility and other past-cycle dynamics, cryptocurrency performance has not been out of parameters, as there have been price drops for “darling” companies such as Big Techs, Tesla, Netflix and many others that have had similar or even worse negative performance. digital assets”.
“It is important that index funds stick to what they are proposing. In this sense, when it comes to the performance of ETFs, they all stay well committed to the target index,” says Samir Kerbaj, partner and CTO of Hashdex, director in charge of HASH11, the ETF that led It led to the emergence of a chain, launched in April 2021 that replicates the Nasdaq Crypto Index (NCI), an index created by the principal in partnership with Nasdaq, that tracks the movement of 12 crypto-assets.
Kerbaj notes that despite the negative performance, which could cause a flurry of sales and recalls, the manager recorded “net financing,” that is, more contributions than withdrawals, worth R$783.4 million, added to its six products. In 12 months, the number of stake holders also increased from 149.5 thousand at the end of December 2021 to 183.9 thousand last month.
The launch of Hashdex-themed ETFs throughout 2022, according to Kerbage, is part of the long-term investment thesis and “the importance of establishing a track record,” that is, a history of investment performance over time. “The product will be available when people search for it,” he justifies.
Responsible for the first ETF with direct exposure to bitcoin, QBTC11, QR Asset is also betting on decentralized finance. QDFI11, which was launched in February last year, was the first of its kind in the world, replicating the Bloomberg Gqualaxy DeFi Index.
“The decentralized finance sector is emerging and is one of the big use cases for cryptocurrencies, which creates parallels between decentralization and traditional financial products,” Ludolph highlights.
Of the three available options, two (QBTC11 and QDFI11) recorded a total net inflow of R$75.7 million. QETH11, with exposure to Ethereum, had more recoveries of R$5.7 million. The year ended 2022 with 53,800 shareholders.
Breaking away from a pattern of initially focusing on bitcoin or ethereum, Investo debuted in the cryptocurrency market with two thematic ETFs: NFTS11, which duplicates MVIS CryptoCompare Media & Entertainment Leaders Brazil Index, and BLOK11, which duplicates MVIS CryptoCompare Smart Contract Leaders. Brazil index.
“We believe in the power that cryptocurrencies will have in economies in five, ten or fifteen years,” says Cauê Mançanares, President and Co-Founder of Investo. “From this perspective, we have presented strategies to focus on specific crypto sectors, such as NFTs, which will be strategic for metaverses, with great adhesion potential. And smart contracts, smart contracts, which are part of the decentralized finance context.”
With its thematic ETFs, Investo had net funding of R$22 million, ending the year with 3,600 shareholders.
“The ETF’s potential is really capturing the growth of this sector,” notes Manchanares. “We adjust the portfolio according to the potential growth and potential evolution of the cryptocurrency over time, and evaluate the use cases.”
For managers, it is not possible to assess the behavior of the cryptocurrency market in the short term, but to suggest long-term ETFs, as well as stocks and other risky assets.
“supposed to [ênfase em supostamente]The worst is over,” Marinelli assesses. “What we can have from now on is a lukewarm period. There shouldn’t be an ascension cycle too close.”
The Genial analyst argues that cryptocurrencies should go through a period of building and consolidation, with new investors joining the asset. He notes that “the crisis of confidence caused by FTX’s bankruptcy has been circumvented, as it proves that it was not a problem of the fundamentals of the system, but of fraud and crime against investors.”
In this sense, Marinelli asserts that the ETF remains an excellent alternative for those who want to expose themselves to this asset class without the main problems in the crypto market, such as asset custody and the high level of knowledge required to manage a cryptocurrency wallet.