In 2023, digital asset investment products brought in $2.25 billion, making it the third-best year since 2017. This marks a significant recovery for the asset class, with inflows 2.7 times higher than 2022. The latest report by CoinShares reports that 2020 saw $6.6 billion in inflows, while 2021 reached $10.7 billion.
The majority of the recovery occurred in the final quarter, coinciding with the SEC showing signs of becoming more open to spot-based Bitcoin ETFs in the US. Total assets under management (AuM) increased by 129% over the year, reaching $51 billion, the highest level since March 2022.
Bitcoin continues to dominate investor confidence, bringing in $1.9 billion in inflows and representing 87% of total flows, a new record high. This surpasses the previous peak in 2020 when it received 80% of the flows, and it was at a low point in 2017 with only 42%. CoinShares notes that there is no clear trend in these figures, and the excitement surrounding a potential approval of a spot Bitcoin ETF could be a contributing factor.
Not all investors were optimistic, as some put $60 million towards short positions in Bitcoin, anticipating a decline in its price. Ethereum experienced a recovery in inflows, reaching $78 million by the end of the year, but it remains a laggard compared to the total assets under management, representing only 0.7%.
Investors’ hesitancy towards Ethereum benefited Solana, which received $167 million in inflows, accounting for 20% of AuM. During the same period, XRP and Cardano saw inflows of $18 million and $14 million, respectively, representing nearly 24% and 20% of their AuMs. Polkadot and Litecoin also saw inflows of $6 million and $3 million, making up 16% and 2% of their AuMs, respectively.
In terms of geographical distribution, the United States saw the most significant inflows at $792 million, but this only made up 2% of the assets under management. Germany had the most substantial inflows at 22% of AuM, followed by Canada at 15% and Switzerland at 13%. CoinShares suggests that the US lagging behind could be due to potential investor preference for a spot-based ETF.
