Financial market observers echoed the risks and warned investors to exercise caution. Mr Gerald Wong, founder of investment advisory platform Beansprout, said it was important for investors to take note of an ETF’s underlying asset, alongside other factors such as the expense ratio and trading commissions when deciding whether to invest. “For example, if I am looking at a Straits Times Index (STI) ETF, it will be linked to how the STI performs. For the Bitcoin ETFs, the underlying asset is Bitcoin which is, like what the MAS has said, highly risky,” he said. Mr Jean Paul Wong of FSMOne.com noted that investors should scrutinise long-term fundamentals – such as future earnings, cashflow situation and yields – underlying any investment they make. In the case of the new cryptocurrency-linked ETFs, the problem is that “a large majority of cryptos continue to have little to no intrinsic value”, he said. “Most cryptos lack any underlying earnings or cash flows, and this is a red flag for any prospective investors, as it is hard to derive a reliable intrinsic value of an asset if it cannot generate income,” he added. “Without fundamental support, we believe crypto is fuelled by sentiment.” Nearly US$4 billion of funds have flowed into the new spot Bitcoin ETFs, particularly to products operated by BlackRock and Fidelity, according to a Reuters report last week citing data from Deutsche Bank. But US$2.8 billion of those were accounted for by flows out of Grayscale – a Bitcoin trust that previously dominated the market but has since been converted into an ETF. The outflows were spurred by Grayscale’s higher management fees – at 1.5 per cent, compared to other Bitcoin ETFs with fees as low as 0.19 per cent to a high of 0.39 per cent, reports have said. The outflows appeared to have had some pressure on Bitcoin prices, analysts said. A further factor in Bitcoin’s price decline was profit-taking by investors who had previously bought into the cryptocurrency with expectations of the ETF approval. Bitcoin was last seen trading at around US$43,373 on Jan 30 afternoon, down nearly 13 per cent from around US$49,000 – the three-year peak it hit on Jan 11, spurred by the launch of the spot ETFs.