Crypto Fund Inflows Surge to $2.2 Billion in 2023, Dominated by Bitcoin
Crypto fund inflows at asset managers like CoinShares, Grayscale, ProShares, and 21Shares reached $2.2 billion last year, with bitcoin investment products leading the way, according to CoinShares’ 2023 report.
This marks a significant turnaround from 2022, with inflows in 2023 being 2.7 times higher and making it the third-largest year since 2017. However, these figures are still lower than the inflows seen in 2021 ($10.7 billion) and 2020 ($6.6 billion).
James Butterfill, CoinShares Head of Research, noted that much of the recovery happened in the final quarter when it became evident that the SEC was warming up to the launch of bitcoin spot-based ETFs in the United States.
Bitcoin Funds Dominate Inflows
Bitcoin funds received the majority of inflows, capturing $1.9 billion or 87% of the total. This is the largest percentage so far, surpassing the previous peak of 80% in 2020 and the lowest of 42% in 2017.
Butterfill added that there doesn’t seem to be a discernible trend and speculated that hype around an SEC ETF approval could be a significant factor.
Ether Products Lag Behind as Solana Benefits
Total assets under management (AUM) for crypto funds grew by 129% to reach $51 billion, the highest level since March 2022. However, while blockchain equities saw substantial inflows of $458 million (3.6 times higher than in 2022), ether investment products only saw a recovery toward the end of 2023, with inflows reaching $78 million, representing just 0.7% of their total AUM.
On the other hand, Solana benefited from investor reluctance towards ether-based funds and received inflows of $167 million, accounting for 20% of their total AUM.
Regional Inflows and AUM
In terms of regional inflows, the U.S. led the way with $792 million, followed by Germany with $663 million and Canada with $543 million. However, when considering the flows as a percentage of AUM in each country, the U.S. lagged behind at only 2%, compared to Germany’s 22% and Canada’s 15%.
Butterfill suggested that the preference for a spot-based ETF among investors could explain the U.S.’s lower percentage.
Hot Take: Crypto Fund Inflows Surge in 2023 Driven by Bitcoin Investments
The crypto market experienced significant growth in fund inflows in 2023, reaching $2.2 billion. Bitcoin investment products dominated these inflows, capturing 87% of the total amount. The recovery in the final quarter was driven by increasing optimism surrounding the launch of bitcoin spot-based ETFs in the United States. However, ether products lagged behind, only accounting for 0.7% of their total assets under management (AUM). Investor reluctance towards ether-based funds benefitted Solana, which received significant inflows. The U.S., Germany, and Canada were the top countries in terms of inflows, but when considering percentages relative to AUM, Germany and Canada surpassed the U.S. This data suggests that investor preference for spot-based ETFs influenced these trends.
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