Record Inflows for Digital Asset Investment Products in 2023
In 2023, digital asset investment products saw inflows of $2.25 billion, making it the third-best year since 2017. This marks a significant rebound for the asset class, with inflows being 2.7 times higher than in 2022. The majority of this recovery occurred in the final quarter, coinciding with indications of the SEC’s increased openness to spot-based Bitcoin ETFs in the United States. Total assets under management (AuM) also experienced a 129% increase, reaching $51 billion, the highest level since March 2022.
Bitcoin Dominates Inflows with an 87% Share
CoinShares’ latest report reveals that Bitcoin attracted $1.9 billion in inflows, representing 87% of the total flows. This dominance in flows is the highest recorded so far, surpassing the previous peak in 2020. The excitement surrounding the potential approval of a spot Bitcoin ETF is likely the main driver behind this trend. However, some investors have directed $60 million towards short positions in Bitcoin, anticipating a potential price decline. Ethereum saw a recovery in inflows, reaching $78 million by year-end but remains a laggard compared to total AuM.
Other Beneficiaries and Geographical Distribution
Solana benefited from investor hesitancy towards Ethereum, receiving inflows totaling $167 million. XRP and Cardano also garnered significant inflows, while Polkadot and Litecoin registered smaller amounts. In terms of geographical distribution, the United States had the highest inflows at $792 million, but it only accounted for 2% of AuM. Germany had the most substantial inflows at 22% of AuM, followed by Canada and Switzerland at 15% and 13%, respectively.
Hot Take: Positive Rebound for Digital Asset Investment Products
The significant inflows seen in digital asset investment products in 2023 indicate a positive rebound for the asset class. With a strong focus on Bitcoin, investor confidence remains high, especially with the potential approval of a spot Bitcoin ETF. While Ethereum lags behind, other cryptocurrencies like Solana, XRP, and Cardano have attracted notable inflows. Geographically, Germany has emerged as a leading market for digital asset investments. Overall, this growth in inflows signals increasing interest and adoption of cryptocurrencies as investment assets.
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