Galaxy and State Street launch 3 crypto ETFs amid rising outflows

State Street Global Advisors and Galaxy Asset Management have launched three new crypto-focused exchange-traded funds (ETFs) despite the recent trend of significant outflows from similar investment products. 

The newly introduced ETFs aim to offer exposure to the blockchain and cryptocurrency sectors while managing the inherent volatility of digital assets. 

The three ETFs—SPDR Galaxy Digital Asset Ecosystem ETF (DECO), SPDR Galaxy Hedged Digital Asset Ecosystem ETF (HECO), and SPDR Galaxy Transformative Tech Accelerators ETF (TEKX)—are designed to provide investors with access to companies involved in blockchain technology without directly holding cryptocurrencies like Bitcoin (CRYPTO:BTC) or Ethereum (CRYPTO:ETH). 

Instead, these funds invest in shares of crypto-related firms and other ETFs that hold Bitcoin futures. 

Anna Paglia, Chief Business Officer for State Street Global Advisors, emphasized the appeal of these new ETFs for investors wary of the price swings in individual cryptocurrencies. 

She stated, "We believe the next step in this market is the introduction of actively managed digital asset portfolios." 

The DECO ETF focuses on companies benefiting from blockchain and cryptocurrency adoption, such as Bitcoin miners Core Scientific, Hut 8, and Terawulf, along with holdings in traditional finance companies like Meta and Visa. 

The HECO ETF has a similar portfolio but includes BlackRock and BlackRock’s IBIT spot Bitcoin ETF shares, while also using covered call and protective put options to manage volatility. 

TEKX targets firms involved in disruptive technologies like blockchain and artificial intelligence. 

The launch comes during a challenging period for the crypto market, with $726 million in outflows from crypto investment products last week—the largest since March. 

Bitcoin and Ethereum led these outflows with $643 million and $98 million, respectively. 

However, there was a modest inflow of $28.7 million in spot Bitcoin ETFs, marking the first positive movement after eight days of outflows. 

According to CoinShares analysts, the recent negative sentiment in the market is tied to uncertainty over potential interest rate cuts following weak economic data in the US. 

As the market awaits further data, including Tuesday’s inflation report, the likelihood of future rate cuts could influence the trajectory of these newly launched ETFs.