2023 Sees Remarkable Surge in Digital Asset Investment Products, CoinShares Report

Bitcoin dominates as altcoins show mixed performance.

The year 2023 witnessed a resurgence in digital asset investment products, with inflows totaling $2.25 billion. This ranks as the third-best year since 2017, trailing behind 2020 and 2021, which recorded inflows of $6.6 billion and $10.7 billion respectively, as per CoinShares’ latest report.

The inflows for 2023 marked a significant recovery for the asset class, being 2.7 times higher than those recorded in 2022. The bulk of this recovery was observed in the final quarter, aligning with growing signs of the SEC’s openness towards the introduction of spot-based Bitcoin ETFs in the United States. Total assets under management (AuM) saw a 129% increase over the year, culminating at $51 billion, the highest since March 2022.

Bitcoin emerged as the clear favorite among investors, attracting $1.9 billion of inflows, accounting for 87% of total flows. This dominance in flows is the highest ever recorded, surpassing the previous peak in 2020 when it captured 80% of the flows. CoinShares noted that there is no discernible trend in these figures, attributing the surge to the anticipation surrounding the potential approval of a spot Bitcoin ETF. However, not all investors shared this optimism, with some directing $60 million towards short positions in Bitcoin, in anticipation of a potential price drop.

Ethereum saw a recovery in inflows, reaching $78 million by year-end, but lagged in comparison to the total AuM, representing only 0.7%. Solana capitalized on investor hesitancy towards Ethereum, receiving inflows totaling $167 million, equivalent to 20% of AuM. XRP and Cardano also saw inflows of $18 million and $14 million, respectively, representing nearly 24% and 20% of their AuMs. Polkadot and Litecoin registered annual inflows of $6 million and $3 million, making up 16% and 2% of their AuMs, respectively.

Geographically, the United States saw the highest inflows, totaling $792 million, but this accounted for only 2% of the AuM. In contrast, Germany recorded the most substantial inflows relative to AuM at 22%, with Canada and Switzerland trailing closely at 15% and 13%, respectively. CoinShares suggested that the US’s lag could be attributed to potential investor preference for a spot-based ETF.