This dominance marked a historical peak, surpassing previous records in 2020 when Bitcoin captured 80% of the flows.
In 2023, digital asset investment products experienced a remarkable resurgence, attracting US$2.25 billion in inflows, a significant 2.7 times higher than the previous year, according to a report by CoinShares.
This surge positioned 2023 as the third-largest year for such investments since 2017, trailing behind 2020 and 2021.
Bitcoin emerged as the primary beneficiary of this renewed investor interest, garnering an impressive US$1.9 billion in inflows, constituting a substantial 87% of the total flows.
This dominance marked a historical peak, surpassing previous records in 2020 when Bitcoin captured 80% of the flows. The resurgence in Bitcoin’s popularity can be attributed to improved investor sentiment, particularly in the final quarter, as the SEC signaled openness to the launch of Bitcoin spot-based ETFs in the United States.
Crypto AUM up by 129% in 2023
The overall assets under management (AuM) witnessed a remarkable 129% increase throughout the year, culminating at US$51 billion, reaching levels last seen in March 2022. Ethereum experienced a recovery in inflows, concluding the year with US$78 million, although it remains a minor contributor, representing only 0.7% of the total AuM. In contrast, Solana benefited from investor hesitation regarding Ethereum, attracting US$167 million in inflows, comprising 20% of AuM.
Geographically, the United States led in terms of inflows with US$792 million, but this accounted for a mere 2% of AuM. Germany outpaced other nations in terms of the percentage of AuM with the largest inflows, securing 22%, followed by Canada and Switzerland at 15% and 13%, respectively. The United States’ lag in inflows may be attributed to investors’ preference for a spot-based ETF.
Blockchain equities also witnessed a positive trend, with AuM surging by 109% and total inflows reaching US$458 million, marking a notable 3.6 times increase compared to 2022. This data underscores the growing significance of digital assets and blockchain-related investments in the financial landscape.
CoinShares targeting US hedge funds
In September 2023, CoinShares unveiled the launch of its hedge fund division, CoinShares Hedge Fund Solutions. This strategic move signifies CoinShares’ expansion beyond its established European base and marks a significant step towards becoming a go-to destination for institutional investors interested in digital assets.
The company plans to offer an array of private investment products catering to the unique needs of each institution, from beta to alpha strategies and hybrids in between, facilitating the creation of diversified and optimized crypto portfolios.
CoinShares’ journey into the hedge fund division is a homecoming of sorts. The company initially began as the commodity hedge fund Global Advisors and later founded the regulated Global Advisors Bitcoin Investment Fund (GABI) in 2014, which operated until 2017.
CoinShares minimizing counterparty risk with OKX and Komainu
In November 2023, CoinShares announced a partnership with OKX and Komainu to conduct 24/7 trading on the OKX platform while ensuring assets are held in segregated custody with Komainu.
This collaboration marks a pivotal advancement in institutional crypto trading. It addresses a critical concern in the crypto world: counterparty risk. By holding collateral assets in third-party custody with Komainu, the collaboration ensures enhanced security and mitigates risks for institutional traders.
This arrangement sets a new standard for the integration of institutional traders with top-tier trading platforms, offering clarity on rights, responsibilities, and redress mechanisms.
