WisdomTree cryptocurrency funds lose value in fourth quarter
Luisa Crawford Feb 05, 2023 11:07
Despite rising revenues and fund inflows, the $82 billion fund manager posted a fourth-quarter net loss.
As a result of the protracted bear market in Bitcoin (BTC) and other cryptocurrencies, the value of the digital asset assets managed by WisdomTree, a fund management company based in the United States, fell by a significant amount during the fourth quarter.
The cryptocurrency funds managed by WisdomTree had a total asset value of $136 million as of the end of the year 2022, which was down from $163 million at the beginning of the quarter and represented a depreciation of $23 million, the company disclosed in its quarterly earnings report on February 3, 2023. During the period under review, there was a total of just $4 million worth of redemptions or outflows from the funds. In the previous year, the cryptocurrency portfolios managed by WisdomTree contained a total value of assets equal to $357 million.
Although the fund manager's operational revenues grew to $73.31 million in the fourth quarter, the manager reported a net loss of $28.3 million for the period. It was the eleventh consecutive quarter in which positive inflows were recorded, and net flows came in at $5.3 billion.
The loss in WisdomTree's cryptocurrency portfolio of over 62% year-over-year is comparable with the decline in the larger cryptocurrency market during the same time period. According to CoinMarketCap, the overall market value of cryptocurrencies reached more than $2.2 trillion by the end of 2021. However, this figure dropped to about $795 billion the following year.
During the second quarter of 2022, WisdomTree's portfolio saw a loss of $235 million, which was the company's largest cryptocurrency loss to date. The crypto markets were in a state of disarray at the time because of the failure of Terra Luna and the knock-on consequences it had on other firms, including as the hedge fund Three Arrows Capital and the cryptocurrency lender Celsius, both of which declared bankruptcy in July.
WisdomTree has a number of funds that are focused on blockchain technology and allow investors access to the digital asset market via the use of conventional financial infrastructure. In December, the United States Securities and Exchange Commission gave WisdomTree the go-ahead to list nine new blockchain-enabled funds on its platform. However, the securities regulator has repeatedly shot down proposals to create an exchange-traded fund that would invest in spot Bitcoin transactions.
According to the cryptocurrency financial services platform Matrixport, institutional investors have been stepping up to purchase the drop despite the recent pessimism that has been surrounding crypto assets. According to the data given by the company, it seems that institutional investors residing in the United States have been responsible for the majority of Bitcoin purchases in recent months.
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