According to James Butterfill, Head of Research at CoinShares, this increase signals a significant shift in investor sentiment and market dynamics compared to the previous year.
Despite this uptick, the inflows remained under the record highs of $10.7 billion in 2021 and $6.6 billion in 2020. Butterfill attributes much of the recovery to the final quarter of the year, noting:[This was] where it became increasingly clear that the SEC was warming up to the launch of bitcoin spot-based ETFs in the United States.
Diverse Investment Trends Across Crypto Funds
Bitcoin investment products were the primary beneficiaries, accounting for $1.9 billion or 87% of yearly inflows. This dominance of Bitcoin-related inflows marks the largest percentage allocation to date, surpassing the previous peak of 80% in 2020 and significantly higher than the 42% seen 5 years ago in 2017. Butterfill noted no clear trend in this allocation, suggesting that the hype surrounding US SEC-approved spot ETF might be a contributing factor. In contrast, Ethereum investment products saw a modest recovery in inflows towards the year’s end, totaling $78 million. However, this represented only 0.7% of Coinshares’ total Assets Under Management (AUM). On the other hand, Solana investment products recorded inflows of $167 million or 20% of the firm’s total AUM in 2023. The US led the pack in terms of inflows in dollar terms, with $792 million, followed by Germany with $663 million and Canada with $543 million. However, when analyzing inflows as a percentage of AUM, the US saw a modest 2% increase, while Germany and Canada witnessed a more significant growth of 22% and 15% of AUM, respectively.This disparity suggests a regional variation in investor preferences and strategies, particularly in the US, where the anticipation of a spot-based ETF may have influenced investment choices, according to Butterfill.
In total, assets under management at these funds surged by 129% over the year, hitting a high of $51 billion, a value not seen since March 2022. Blockchain equities also saw a rise, with inflows increasing 3.6 times to $458 million in 2023, resulting in a 109% rise in AUM.
Recent Market Recovery Post-Matrixport’s Report
The crypto market, however, is not without its recent turmoil. The market faced a setback following a by Matrixport, which speculated on the rejection of spot Bitcoin ETFs by the US SEC.
This report triggered a brief market downturn, with Bitcoin and Ethereum experiencing significant drops. Nonetheless, both cryptocurrencies show signs of recovery, with Bitcoin regaining its $43,000 mark and Ethereum climbing above $2,200.