Valkyrie Commits to Crypto, Shrugs Off Turmoil

‘We don’t plan on pivoting,’ Investment Chief McClurg says.

Valkyrie Investments might have chosen to leave cryptocurrencies after layoffs, a funding loss and chaos in the markets in which it invests. 

Not so fast, Chief Investment Officer Steven McClurg told ETF.com: “We don’t plan on pivoting.” 

Cryptomarkets have given McClurg and Nashville-based Valkyrie—one of the first bitcoin ETF issuers—plenty of reasons to move to another asset for their funds. Besides bitcoin and other crypto prices falling all year, investors are being rattled by the multibillion-dollar meltdown of the FTX exchange and disclosures of the firm’s lack of controls and oversight.  

Valkyrie has had its share of problems. The Valkyrie Bitcoin Strategy ETF (BTF), which invests in CME bitcoin futures, has lost three-quarters of its value over the past year, dropping to $18.2 million and far outpacing declines in the S&P 500 and Nasdaq. The fund, issued last October, rose 1.8% in midday trading. 

The small firm cut six workers—30% of its workforce—in recent months. Last month it announced it lost $5 million of an $11.2 million fundraising round when participant CSA Evolution VC Fund backed out.  

'Here to Stay' 

Still, McClurg believes the drop in the cryptomarket is a short-term concern. Institutional investors, as well as broker-dealers, remain interested in digital currencies.  

“We absolutely do” plan on staying in crypto, he said. “Block chain is a technology that’s here to stay, and crypto is a currency that’s here to stay.” 

The firm says the layoffs were part of restructuring its distribution team and that it managed to replace some of the initial funding allocation. McClurg said they are holding off on any aggressive capital raising efforts for now. 

“There’s likely to be a pause in investments in the sector over the next few quarters until the FTX situation blows over,” he added.  

The firm also has one other fund, the Valkyrie Bitcoin Miners ETF (WGMI), which invests in bitcoin mining firms. The small fund fell 1.8% in midday trading. 

Valkyrie does not have any new ETFs on the horizon. 

“The market is down in general, be it tech or bonds. But you don’t see asset managers just throwing their hands up and walking away,” McClurg noted. 

Contact Zoya Mirza at [email protected]