Crypto inflows tripled to $2.2B in 2023

Inflows into crypto investment products eclipsed $2.2 billion in 2023 — nearly triple the total seen the prior year.

Net inflows into such vehicles spiked sharply from the roughly $800 million seen in 2022. However, the yearly total lagged 2020 and 2021, during which crypto products notched inflows of $6.6 billion and $10.7 billion, CoinShares data shows.

The segment’s assets under management increased by 129% during 2023, ending at $51 billion — the highest level since March 2022.

“Much of the recovery was in the final quarter where it became increasingly clear that the [US Securities and Exchange Commission] was warming up to the launch of bitcoin spot-based ETFs in the United States,” CoinShares head of research James Butterfill wrote in a Wednesday report.

The SEC is expected to rule on spot bitcoin ETFs by Jan. 10. Though bitcoin’s price dipped Wednesday, the asset is up more than 150% in the past year.

Bitcoin products accounted for about 87% of the net inflows in 2023. About a third of the yearly asset gains — $792 million — came from US vehicles.

From an issuer standpoint, ProShares was a standout. It beat all other competitors with $640 million in net flows.

The Maryland-based company launched the first bitcoin futures ETF in October 2021. The ProShares Bitcoin Strategy ETF welcomed $506 million in net flows in 2023 and now has roughly $1.7 billion in assets.

Bloomberg Intelligence analyst Eric Balchunas said on Bloomberg TV in November that BITO’s inflows are a bit ironic considering the fund’s potential fate.

“This is the ETF that’s probably going to be sort of under pressure, or seeing some exodus, once the spot ETFs come out, because people prefer those,” he said at the time. “But until then, it’s being used in anticipation of those ETFs.”

ProShares was also among the several issuers to launch the first ether futures ETFs last year. But its three funds that hold ether futures contracts only account for about $20 million in combined assets.

Solana-focused products tallied $167 million in net inflows in 2023, according to CoinShares, ranking ahead of ether and short bitcoin funds, which notched $78 million and $60 million, respectively.