2023: Digital Asset Fund Flows Weekly Report

2023 inflows 2.7x greater than 2022, Bitcoin the main benefactor

Digital asset investment products saw US$2.25bn of inflows for the full year in 2023, marking it as the 3rd largest year based on data back to 2017, surpassed by 2020 at US$6.6bn and 2021 at US$10.7bn. Importantly the inflows were 2.7x the inflows seen in 2022, marking a dramatic turnaround for the asset class. Much of the recovery was in the final quarter where it became increasingly clear that the SEC was warming up to the launch of Bitcoin spot-based ETFs in the United States. Total assets under management (AuM) has risen by 129% over the year, ending at US$51bn, the highest since March 2022.

Bitcoin was by a wide margin the greatest benefactor from improving investor sentiment, with US$1.9bn of inflows, representing 87% of total flows. Its dominance in flows is the largest in history with the prior peak being 2020 where it received 80% of the flows and the lowest being 2017 at just 42%. There does not seem to be a discernible trend here, with the most likely cause being hype around and SEC ETF approval.

Ethereum saw a recovery of inflows to end the year at US$78m but remains a laggard relative to the total AuM representing of only 0.7%. Meanwhile Solana benefitted from investor reluctance on Ethereum, seeing inflows totalling US$167m, representing 20% of AuM.

The US saw the largest inflows of US$792m, but this only represented 2% of AuM, while Germany saw the largest inflows at 22% of AuM followed by Canada and Switzerland at 15% and 13% respectively. The US lagging is perhaps understandable given the likely preference amongst investors for a spot-based ETF.

Blockchain equites also benefitted, with AuM rising by 109% and seeing total inflows of US$458m, 3.6x the inflows seen in 2022.