2023 has proven to be a banner year for Bitcoin, with digital asset investment products witnessing a staggering 2.7x increase in inflows compared to 2022. According to the latest report by CoinShares, “2023 Digital Asset Fund Flows Weekly Report,” the cryptocurrency market experienced a resurgence, marking it as the third-largest year since data tracking began in 2017.
For the entirety of 2023, digital asset investment products attracted an impressive $2.25 billion in inflows, with the lion’s share going to Bitcoin. The surge in interest and investment in the final quarter of the year was particularly noteworthy, coinciding with growing indications that the U.S. Securities and Exchange Commission (SEC) was warming up to the prospect of launching Bitcoin spot-based exchange-traded funds (ETFs). The total assets under management (AuM) for digital asset investment products soared by a remarkable 129% over the year, culminating at a staggering $51 billion, marking the highest level since March 2022.
Bitcoin Dominance: Unprecedented 87%
Bitcoin captured a whopping $1.9 billion in inflows, constituting a staggering 87% of the total flows. This dominance in inflows is unprecedented in the history of cryptocurrency, surpassing the previous peak in 2020 when Bitcoin received 80% of the total flows. The lowest point was recorded in 2017, with a meager 42%. The lack of a discernible trend suggests that the surge is likely attributed to the hype surrounding the potential approval of SEC ETFs.
While Ethereum experienced a recovery in inflows, reaching $78 million by the year’s end, it remains a laggard in comparison, representing only 0.7% of the total AuM. Solana, on the other hand, capitalized on investor reluctance toward Ethereum, attracting inflows totaling $167 million, which accounts for a substantial 20% of the total AuM.
Geographically, the United States led in terms of inflows, with a substantial $792 million. However, this accounted for only 2% of the total AuM. In contrast, Germany emerged as the front-runner, with inflows representing an impressive 22% of the total AuM, followed by Canada and Switzerland at 15% and 13%, respectively. The U.S.’s relatively lower share of inflows is perhaps indicative of investor preferences leaning towards a spot-based ETF. Meanwhile, blockchain equities also experienced a surge in fortunes, with AuM rising by an impressive 109%, accompanied by total inflows of $458 million – a remarkable 3.6 times the inflows recorded in 2022.
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