Crypto Investors Are Diversifying; non-bitcoin, ether funds see inflows

According to a report by digital asset data provider CryptoCompare, global crypto investors may be aiming to diversify their portfolios to hedge against black swan events, following several high-profile crashes earlier this year.

Global asset-based crypto funds that fall into the “other” category (representing non-bitcoin and ethereum products) saw the largest gains in assets under management (AUM), rising 12.3% for reach $1.13 billion as of Aug. 23, according to the data.

The multi-asset and other fund categories recorded positive net flows of $1.3 million and $0.8 million, respectively, in the first three weeks of August. The report also states that Ethereum-based crypto funds led the rebound in July and continued to outperform in August. Assets of bitcoin-based products fell 7.16% to $17.4 billion in August, while ethereum-based products posted gains of 2.36% to $6.81 billion .

“Even at a more granular level, no bitcoin product covered in the report posted AUM or volume gains in August. Ethereum-based products are garnering attention with the long-awaited ‘merger’ on the horizon,” CryptoCompare said.

Ethereum is transitioning to proof-of-stake for its consensus protocol. Called the “merger,” the software upgrade has been in the works for years, and it will change the way Ethereum orders transactions to become more energy efficient.

Reports highlighted that since the end of July 2022, total assets under management across all digital asset investment products have fallen from $4 billion to $25.8 billion (as of August 23).

In August, Bitcoin’s AUM fell 7.16% to $17.4 billion and as a result its market share fell to 67.6% of total AUM from 76.9% in August. July. Ethereum products now account for 26.5% of total AUM, their largest market share since the start of the year.

Additionally, Grayscale products continued to account for the vast majority of AUM at $19.0 billion (73.7% of the total), followed by XBT Provider at $1.49 billion (5. 78% of the total) and 21Shares at $1.04 billion (4.04% of the total).

Grayscale products are preferred by global institutional investors. Additionally, assets under management represented by ETFs fell in August, down 0.64% to $2.48 billion, controlling 11% of the market share.

According to the report, average daily aggregate volumes across all digital asset investment products fell an average of 1.01% to $131 million from July to August, underscoring market weakness.

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