Revival of Cryptocurrencies Spurs Record Inflows into Digital Asset Funds in 2023

Influx of over $1 billion into Bitcoin and Ethereum funds marks a turning point in digital asset management.

The digital asset landscape in 2023 has witnessed a remarkable resurgence of cryptocurrencies, notably Ethereum and Bitcoin. This revival has not only marked a significant turnaround but has also been instrumental in attracting substantial inflows into Bitcoin funds throughout the year.

A recent CoinShares report indicates that investments in cryptocurrency funds surged to a record $1.76 billion this week, marking the highest value since the launch of futures-based exchange-traded funds (ETFs) in the fall of 2021. Asset management firms such as ProShares, 21Shares, Grayscale, among others, have reportedly seen inflows exceeding $1 billion this year, with over $290 million coming in the last month alone, as per CoinShares.

In simple terms, crypto fund inflows refer to the amounts of money that investors are investing in funds specifically designed to hold various cryptocurrencies, such as Ethereum and Bitcoin. Cryptocurrency funds, much like traditional investment funds, pool money from multiple investors to purchase and manage a diverse range of digital assets.

With $133 million in inflows, Bitcoin remains the world’s largest cryptocurrency. Ethereum followed closely with $31 million. The lion’s share of inflows was directed towards bitcoin, representing an increase compared to the previous week’s record influx of $312 million for bitcoin.

James Butterfill, CoinShares Head of Research, states that the latest inflow figure accounts for 4% of the $46.2 billion in assets currently under management.

According to CoinShares, year-to-date inflows have reached $1.14 billion as of November, the third highest amount ever recorded. At the same time, total assets under management increased 9.6% last week and 99% since the beginning of 2023.

In terms of regional contributions to cryptocurrency inflows, Canada and Germany continue to lead with $79 million and $56.9 million, respectively, while US investors added an extra $53.5 million.

Despite having a very low total AUM and a very low number of ETPs, the Asian region is one of the few to have net outflows this year.

The prices of both Bitcoin and Ether have seen significant increases in recent weeks, reaching 18-month highs. This surge is largely due to market anticipation surrounding the upcoming bitcoin halving and the potential approval of a spot bitcoin ETF by the US Securities and Exchange Commission.