A recent survey has revealed a significant surge in the interest of fund managers towards cryptocurrency exchange-traded funds (ETFs).

A recent survey conducted by financial services firm Brown Brothers Harriman (BBH) found that almost 50% of fund managers are planning to include cryptocurrency exchange-traded funds (ETFs) in their investment portfolios by 2023. However, only a quarter of respondents plan to increase their allocation to digital assets.

The survey polled 325 institutional investors, financial advisers, and fund managers from the United States, the United Kingdom, Europe, and China. Despite the cryptocurrency market experiencing a 60% decline from its all-time highs, a majority of institutional investors expressed keen interest in crypto-themed ETFs, with almost three-quarters claiming they were "extremely" or "very" interested.

The effects of the recent crypto market downturn have dampened enthusiasm, with only a quarter of respondents expecting to increase their allocation to crypto ETFs over the next 12 months. However, the survey results indicate that institutional investors still believe in the long-term potential of cryptocurrencies.

The rise in interest in crypto ETFs is attributed to funding managers becoming more comfortable with the inevitable volatility in the crypto market. A clearer regulatory framework, such as the EU's Markets in Crypto Assets proposal, is expected to further increase demand for related ETF exposure.

Two of the largest crypto ETFs currently available are ProShares Bitcoin Strategy (BITO) and Bitwise 10 Crypto Index Fund (BITW). Grayscale's Bitcoin Trust (GBTC) is also one of the largest digital asset investment products by market cap traded on a stock exchange, with a current value of $11 billion.

However, not all crypto ETFs have been successful. The effects of the crypto market downturn saw two Australian crypto ETFs become the worst-performing ETFs in the country, resulting in their delisting at the end of 2022.

In conclusion, despite the recent decline in priority for some institutional investors, a significant number of them are still planning to add crypto-themed ETFs to their portfolios this year. As the crypto market continues to mature and regulatory clarity improves, it is likely that institutional interest in crypto ETFs will increase once again. 

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