Nearly $2.3 billion flowed into crypto-related investment products in 2023, with Bitcoin remaining the "top trend"
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Nearly $2.3 billion flowed into crypto-related investment products in 2023, with Bitcoin remaining the "top trend"
Bitcoin funds dominated last year with $1.9 billion in inflows, accounting for 87% of the total $2.3 billion in inflows.
Navigating Web3 tides with focused insightsBy Mary Liu, Bitpush News
A recent report from asset management firm CoinShares reveals that digital asset investment products saw approximately $2.3 billion in inflows during 2023—ranking as the third-highest year for net inflows since 2017, behind only 2021's $10.7 billion and 2020's $6.6 billion. The total inflows in 2023 were still 2.7 times those of 2022.
Total assets under management (AUM) in crypto funds reached $51 billion, the highest level since March 2022.
Bitcoin Funds Dominate
Bitcoin funds dominated last year with $1.9 billion in inflows, accounting for 87% of the total $2.3 billion—a record high share. Previously, the peak was 80%, recorded in 2020, according to CoinShares.
The report notes that speculation around spot Bitcoin ETF approvals fueled a surge in Bitcoin’s price. From the week of September 25 through year-end, capital continued flowing into the crypto sector, with only one week showing outflows.
The United States led global inflows with $792 million, although this represents just 2% of the $37.8 billion in crypto assets managed by U.S. institutions such as Grayscale and Ark Invest.
In comparison, Germany, Canada, and Switzerland saw inflows of $663 million, $543 million, and $434 million, respectively.
Crypto equities benefited from this trend, attracting $458 million in inflows and driving AUM growth of 109%. Bitcoin mining stocks performed particularly well. Bernstein analysts noted in December that “Bitcoin miners remain the high-beta version of Bitcoin equity.”
Solana emerged as another major winner. Investment products linked to SOL witnessed $167 million in inflows during 2023. The token surged approximately 941% over the year, rising from around $9.60 to $101.
Meanwhile, CoinShares stated that Ethereum remained “lagging,” with only $78 million in inflows—an underwhelming performance for the second-largest cryptocurrency by market cap. CoinShares analysts said Solana “benefited from investors frustrated with long-standing issues on Ethereum.”
From an issuer perspective, ProShares’ products stood out, leading all competitors with $640 million in net flows. The Maryland-based firm launched the first Bitcoin futures ETF in October 2021. Its ProShares Bitcoin Strategy ETF (BITO) attracted $506 million in net inflows during 2023 and now holds about $1.7 billion in assets.
Potential Impact of Spot ETFs
Investors await news on the approval of spot Bitcoin ETFs. Bloomberg Intelligence analysts estimate a 90% chance of approval by January 10, citing ongoing meetings and application amendments.
Bloomberg Intelligence analyst Eric Balchunas previously said on Bloomberg TV in November: “Once spot ETFs launch, this ETF could face pressure or some outflows, as investors prefer spot products. But until then, it’s being used to anticipate those ETFs.”
ProShares’ global investment strategist Simeon Hyman believes the spot Bitcoin market still has flaws, including price discrepancies across exchanges and platform risks.
In an interview with Bloomberg, Hyman pointed out that Bitcoin prices vary significantly across exchanges and are highly volatile, while crypto futures settle daily based on a composite of multiple prices.
Hyman also expressed skepticism about how cash creation and redemption would function in practice. In this process, authorized participants exchange cash (rather than underlying securities) with the issuer, who then assumes responsibility for buying or selling Bitcoin. Most ETFs use an in-kind mechanism, where authorized participants deliver the actual assets to the issuer and receive ETF shares in return.
Regarding the Bitcoin futures market, he said: “It’s a mature, liquid, and regulated space. The spot market is still somewhat ‘weird.’ It brings to mind negative headlines about FTX, Binance, and others.” ProShares was also among the first issuers to launch Ethereum futures ETFs last year, though its three funds holding Ethereum futures have a combined AUM of only about $20 million.
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