FINTECH: Crypto investment funds attract $2 billion in 2023

As published on: financefeeds.com, Friday 5 January, 2024.

The year 2023 marked a notable surge in investments in digital asset exchange-traded products (ETPs), with inflows exceeding $2 billion.

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This substantial growth positions 2023 as the third-largest year for net inflows into digital asset ETPs since 2017, crypto investment firm CoinShares said in a new report. The total inflows of $2.2 billion for the year were a significant leap from the inflows of 2022, indicating growing investor confidence in cryptocurrency as an asset class.

A key driver behind this influx of investment was the increasing likelihood of the U.S. Securities and Exchange Commission (SEC) approving bitcoin spot-based ETFs in the United States. James Butterfill from CoinShares noted that most of the inflows occurred in the final quarter of the year as this anticipation grew. In the final week of 2023 alone, digital asset ETPs saw $243 million in net inflows.

Bitcoin ETPs dominated the inflow figures, attracting $1.9 billion, which accounted for 87% of the total inflows. This ratio was the highest ever recorded, surpassing the previous high of 80% in 2020. The price of Bitcoin reflected this positive sentiment, climbing around 155% to close the year above $42,000.

The growth wasn’t limited to Bitcoin. The total assets under management (AUM) in these funds escalated by 129% over the year, reaching $51 billion — the highest level since March 2022. Blockchain equities also saw a boost, with inflows of $458 million, which was 3.6 times higher than in 2022. This resulted in a 109% increase in AUM in 2023 for blockchain equities.

Ether investment products, while experiencing a recovery in inflows towards the end of the year with $78 million, represented only a small fraction (0.7%) of their total AUM. Conversely, Solana products saw significant inflows of $167 million, amounting to about 20% of their total AUM.

Breaking down the latest statistics, Coinshares said the aggregate data masks a significant regional polarization of views. In particular, the United States led in terms of the absolute value of inflows, with $792 million, followed by Germany with $663 million and Canada with $543 million. However, when looking at inflows as a percentage of AUM, Germany led with 22%, Canada followed with 15%, and the U.S. saw a growth of 2%.


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