Bitcoin Reigns Supreme: $2.25 Billion Pour into Digital Assets, Solana Surpasses Ethereum

• Bitcoin dominated the positive shift in investor sentiment, attracting US$1.9 billion in inflows, representing 87% of total flows.
• Altcoins like Ethereum and Solana also saw institutional interest, with Ethereum recovering to US$78 million in inflows, while Solana benefited from investor hesitation on Ethereum, garnering US$167 million in inflows.

In the realm of digital assets, 2023 witnessed a substantial resurgence, with investment products experiencing notable inflows of US$2.25 billion throughout the year, according to a report from CoinShares.

This marks the third-largest year based on data dating back to 2017, trailing behind 2020 at US$6.6 billion and 2021 at US$10.7 billion. The significance lies in the fact that these inflows were 2.7 times higher than those observed in 2022, indicating a dramatic turnaround for the asset class.

The final quarter played a pivotal role in this recovery, coinciding with increasing indications that the U.S. Securities and Exchange Commission (SEC) was warming up to the prospect of launching Bitcoin spot-based exchange-traded funds (ETFs).

The total assets under management (AuM) experienced a robust uptick, soaring by 129% over the course of the year and concluding at US$51 billion, reaching its highest point since March 2022.

Bitcoin emerged as the primary beneficiary of the positive shift in investor sentiment, attracting US$1.9 billion in inflows, constituting a dominant 87% of the total flows. This marks the highest level of dominance in flows throughout history. Notably, the year 2020 represented the previous peak with 80% of the flows, while 2017 witnessed the lowest point at just 42%. The absence of a discernible trend is attributed to the influence of hype surrounding SEC ETF approval.

Altcoins See Institutional Inflows

Ethereum experienced a recovery in inflows, concluding the year with US$78 million. However, Ethereum remains a relative laggard, representing only 0.7% of the total AuM. Meanwhile, Solana reaped the benefits of investor hesitation on Ethereum, garnering inflows totaling US$167 million, which accounts for 20% of the AuM.

In terms of geographical distribution, the United States witnessed the largest inflows at US$792 million, constituting only 2% of the AuM. In contrast, Germany led with the most substantial inflows, capturing 22% of the AuM, followed by Canada and Switzerland at 15% and 13%, respectively. The U.S. lagging behind is understandable, given investors’ likely preference for a spot-based ETF.

Blockchain equities also experienced positive outcomes, with AuM surging by 109% and total inflows reaching US$458 million, marking a remarkable 3.6 times increase compared to the inflows seen in 2022.

All Eyes on Bitcoin ETF Approval

On Wednesday, January 3rd, the U.S. Securities and Exchange Commission (SEC) had a discussion with exchanges Nasdaq, Cboe, and NYSE, in order to finalize the comments on their 19b-4 filings.

Fidelity has submitted a Form 8-A filing with the U.S. Securities and Exchange Commission (SEC) seeking registration for shares of beneficial interest in the Fidelity Wise Origin Bitcoin Fund. This move occurs against a backdrop of widespread uncertainty regarding the regulatory classification of crypto assets such as Bitcoin, with ongoing debates over whether they should be considered securities or commodities.