The digital asset investment products experienced inflows of $2.25 billion throughout the entire 2023. This places it as the third-best year based on data dating back to 2017, with 2020 recording $6.6 billion and 2021 reaching $10.7 billion, according to the latest report by CoinShares.
As such, the inflows for 2023 were 2.7 times higher than those observed in 2022, marking a substantial rebound for the asset class.
The majority of this recovery occurred in the final quarter, coinciding with increasing indications that the SEC was becoming more receptive to the introduction of spot-based Bitcoin ETFs in the United States. Total assets under management (AuM) experienced a 129% increase over the year, concluding at $51 billion, the highest level since March 2022.
Bitcoin Breaks Records with 87% Share of Inflows
Bitcoin appears to be riding high on investor confidence, as evidenced by CoinShares’ latest findings, which revealed that digital asset investment products focused on the asset attracted $1.9 billion of inflows, representing 87% of total flows.
This dominance in flows stands as the highest in recorded history, surpassing the previous peak in 2020 when it garnered 80% of the flows and hitting a low point in 2017 at a mere 42%. Interestingly, CoinShares revealed that there is no apparent “discernible trend” in these figures, and the most probable explanation is the excitement surrounding the potential approval of a spot Bitcoin ETF.
Not all market participants were optimistic, as certain investors directed $60 million towards short positions in Bitcoin, anticipating a potential decline in its price.
Meanwhile, Ethereum experienced a recovery in inflows, reaching $78 million by the end of the year; however, it remains a laggard compared to the total assets under management (AuM), representing only 0.7%.
Solana, on the other hand, benefited from investor hesitancy toward Ethereum, receiving inflows totaling $167 million, equivalent to 20% of AuM. During the same period, XRP and Cardano garnered inflows of $18 million and $14 million, respectively, representing nearly 24% and 20% of their AuMs.
Additionally, Polkadot and Litecoin registered annual inflows of $6 million and $3 million, constituting 16% and 2% of their AuMs, respectively.
Geographically
The United States experienced the highest inflows, totaling $792 million, yet this only accounted for 2% of the assets under management (AuM).
In contrast, Germany recorded the most substantial inflows at 22% of AuM, with Canada and Switzerland following closely at 15% and 13%, respectively. CoinShares asserted that the US lagging is possibly reasonable, considering the potential investor preference for a spot-based ETF.