Crypto ETP volumes fell in September as investors sought safer options

According to a recent report by CryptoCompare, a digital asset data resource, aggregate trading volumes exchange traded products (ETP) have plummeted drastically in the month of September. 

Aggregate ETP Volume ($millions) Source: CryptoCompare

Overall daily cryptorrency ETP volumes plunged by roughly 74%, dropping from $186.5 million exchanged in mid-August to an average of $48 million in mid-September. 

Grayscale volumes take a hit

Grayscale’s Bitcoin Trust product represents the overwhelming amount of trading activity in cryptocurrency ETPs, and has therefore taken the biggest hit when it comes to trading volumes. 

Grayscale’s top 3 cryptocurrency products, Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG), lost a combined 77% in trading volume, decreasing from $180 million per day in mid-August to roughly $40 million. 

Top Grayscale Trust Products by Daily Volume ($millions) Source: CryptoCompare

The total asset under management figure (AUM) for Grayscale has also decreased since mid-August, although not nearly as drastically. Grayscale’s AUM has dropped 3.3% from $5.9 billion to $5.7 billion in the last 30 days.

Bitcoin price action drives long-term investors away

According to Constantine Tsavliris, Head of Research at CryptoCompare, the decrease in volumes for these crypto investment instruments has a lot to do with the recent price action of Bitcoin and other crypto assets. He told Cointelegraph:

“The BTC price dropped from approximately $12k to $10k at the beginning of September. Since then, markets have generally been bearish with a few bull runs throughout the month. ETP investors generally invest long-term, and therefore the recent drop in price combined with a generally bearish market has acted as a signal for more cautious trading behaviour.”

While Grayscale has seen the biggest slide in trading volumes, the drop in institutional volume for cryptocurrency ETPs seems to have affected most of the market and not just Grayscale. Tsavliris told Cointelegraph:

“Other ETPs generally experienced a decrease in volume as well. However, Grayscale's products are the most well-known, and their products represent the majority of current ETP trading activity - even after the sharp decrease. They manage assets upwards of $4.7bn for their Bitcoin Trust product, with 84% of new investments in Q2 coming from institutional investors dominated by hedge funds. As a result of their market position in the US as well as their clientele, their trading activity was more sensitive to the factors mentioned above.”