Research Summary
The report highlights the significant growth in digital asset investment in 2023, with inflows 2.7 times greater than 2022. Bitcoin was the primary beneficiary, accounting for 87% of total inflows. The report also notes the rise in assets under management (AuM) and the performance of other digital assets like Ethereum and Solana.
Key Takeaways
Significant Growth in Digital Asset Investment
- Increased Inflows: Digital asset investment products saw inflows of US$2.25bn in 2023, marking it as the third-largest year since 2017. This represents a 2.7x increase from the inflows seen in 2022, indicating a significant turnaround for the asset class.
Bitcoin’s Dominance in Inflows
- Bitcoin’s Popularity: Bitcoin was the greatest benefactor of the improving investor sentiment, with inflows of US$1.9bn, representing 87% of total flows. This dominance in flows is the largest in history, surpassing the previous peak in 2020 where it received 80% of the flows.
Performance of Other Digital Assets
- Ethereum and Solana: Ethereum saw a recovery of inflows to end the year at US$78m but remains a laggard relative to the total AuM, representing only 0.7%. Solana, on the other hand, benefitted from investor reluctance on Ethereum, seeing inflows totalling US$167m, representing 20% of AuM.
Geographical Distribution of Inflows
- US, Germany, Canada, and Switzerland: The US saw the largest inflows of US$792m, but this only represented 2% of AuM. Germany saw the largest inflows relative to its AuM at 22%, followed by Canada and Switzerland at 15% and 13% respectively.
Growth in Blockchain Equities
- Blockchain Equities: Blockchain equities also benefitted from the improving investor sentiment, with AuM rising by 109% and seeing total inflows of US$458m, 3.6x the inflows seen in 2022.
Actionable Insights
- Monitor Bitcoin’s Performance: Given Bitcoin’s dominance in digital asset inflows, it would be prudent to closely monitor its performance and market trends.
- Assess Other Digital Assets: Despite Bitcoin’s dominance, other digital assets like Ethereum and Solana have shown potential. Assessing their performance could provide insights into diversification opportunities.
- Consider Geographical Trends: The report highlights significant geographical differences in inflows. Understanding these trends could help in identifying potential growth markets.
- Explore Blockchain Equities: The significant growth in blockchain equities suggests potential opportunities in this area. Further research into these equities could provide valuable insights.
