WisdomTree cryptocurrency funds lose value in fourth quarter

The fourth quarter saw a substantial drop in the value and assets of WisdomTree’s digital asset management company, which is based in the United States.

WisdomTree’s cryptocurrency funds had a total asset worth of $136million at the end of 2022. This is down from $163 million at its beginning. It also represented a $23m depreciation. The company announced this in its quarterly earnings reports on February 3, 2023. There were only $4 million of outflows or redemptions of funds during the time under review. WisdomTree’s cryptocurrency portfolios had a total asset value of $357 million in the preceding year.

The fund manager’s operational revenue grew to $73.31million in the fourth quarter. However, the manager reported a loss of $28.3million for the period. This was the 11th consecutive quarter of positive inflows, with net flows totaling $5.3 billion.

WisdomTree lost over 62% of its cryptocurrency portfolio year-over-year, which is comparable to the decline in larger cryptocurrency markets during the same time frame. CoinMarketCap estimates that the total market value for cryptocurrencies was more than $2.2 trillion at the end of 2021. This figure fell to $795 billion in the year following.

WisdomTree suffered a $235 million loss in the second quarter 2022. This was the largest cryptocurrency loss the company has ever seen. Due to the collapse of Terra Luna, and the subsequent knock-on effects it had on other firms such as hedge fund Three Arrows Capital, and cryptocurrency lender Celsius, the crypto markets were in disarray at that time.

WisdomTree manages a variety funds that are focused specifically on blockchain technology. They allow investors access the digital asset markets via conventional financial infrastructure. WisdomTree received approval from the United States Securities and Exchange Commission to list nine additional blockchain-enabled funds. The securities regulator repeatedly rejected proposals to create an exchange traded fund that would invest only in spot Bitcoin transactions.

According to Matrixport, institutional investors are buying the drop despite recent pessimism surrounding crypto assets. According to Matrixport, the bulk of Bitcoin purchases made in recent months were by institutional investors in the United States.

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