CoinShares Reports $2.2 Billion Inflows into Digital Asset Investment Products in 2023
CoinShares, a leading crypto asset investment firm, reported a substantial $2.2 billion inflows into digital asset investment products in 2023. This figure represents a notable 2.7-fold increase from the inflows seen in 2022, marking it as the third-largest year for such investments since 2017.
According to James Butterfill, Head of Research at CoinShares, this increase signals a significant shift in investor sentiment and market dynamics compared to the previous year.
Despite this uptick, the inflows remained under the record highs of $10.7 billion in 2021 and $6.6 billion in 2020. Butterfill attributes much of the recovery to the final quarter of the year, noting:
[This was] where it became increasingly clear that the SEC was warming up to the launch of bitcoin spot-based ETFs in the United States.
Diverse Investment Trends Across Crypto Funds
Bitcoin investment products were the primary beneficiaries, accounting for $1.9 billion or 87% of yearly inflows. This dominance of Bitcoin-related inflows marks the largest percentage allocation to date, surpassing the previous peak of 80% in 2020 and significantly higher than the 42% seen 5 years ago in 2017.
Butterfill noted no clear trend in this allocation, suggesting that the hype surrounding US SEC-approved spot ETF might be a contributing factor.
In contrast, Ethereum investment products saw a modest recovery in inflows towards the year’s end, totaling $78 million. However, this represented only 0.7% of Coinshares’ total Assets Under Management (AUM). On the other hand, Solana investment products recorded inflows of $167 million or 20% of the firm’s total AUM in 2023.
The US led the pack in terms of inflows in dollar terms, with $792 million, followed by Germany with $663 million and Canada with $543 million. However, when analyzing inflows as a percentage of AUM, the US saw a modest 2% increase, while Germany and Canada witnessed a more significant growth of 22% and 15% of AUM, respectively.
This disparity suggests a regional variation in investor preferences and strategies, particularly in the US, where the anticipation of a spot-based ETF may have influenced investment choices, according to Butterfill.
In total, assets under management at these funds surged by 129% over the year, hitting a high of $51 billion, a value not seen since March 2022. Blockchain equities also saw a rise, with inflows increasing 3.6 times to $458 million in 2023, resulting in a 109% rise in AUM.
Recent Market Recovery Post-Matrixport’s Report
The crypto market, however, is not without its recent turmoil. The market faced a setback following a bearish report by Matrixport, which speculated on the rejection of spot Bitcoin ETFs by the US SEC.
This report triggered a brief market downturn, with Bitcoin and Ethereum experiencing significant drops. Nonetheless, both cryptocurrencies show signs of recovery, with Bitcoin regaining its $43,000 mark and Ethereum climbing above $2,200.
Hot Take: CoinShares Reports Significant Increase in Inflows into Digital Asset Investment Products
CoinShares has reported a substantial increase in inflows into digital asset investment products in 2023, signaling a shift in investor sentiment and market dynamics. Bitcoin investment products dominated the inflows, accounting for the largest percentage allocation to date. However, Ethereum and Solana investment products also saw some recovery towards the end of the year. The US, Germany, and Canada led in terms of inflows, with regional variations in investment preferences and strategies. Overall, assets under management at these funds surged, reaching a value not seen since March 2022. Despite recent market turmoil triggered by a bearish report, Bitcoin and Ethereum are showing signs of recovery.
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