Digital Asset Funds See Largest Inflows Since Since July 2022: Report

Digital asset funds saw $117 million in inflows last week, the largest in over six months. Bitcoin funds accounted for most of that tally, seeing $116 million in inflows. The record inflows come as Bitcoin and the broader crypto market are off to a strong start in 2023.

Bitcoin Sees Inflows Amounting to $116M

A recent report by digital investment company CoinShares shows that the strong rally in the crypto market so far this year has gained investors’ attention. In total, digital asset investment products saw $117 million in inflows, the largest since July 2022. Moreover, total assets under management (AuM) have jumped to $28 billion, up 43% from November 2022 lows. The report said:

“Investment product volumes are improving with US$1.3bn traded for the week, up 17% compared to the YTD average, while the broader digital asset market has seen average weekly volumes rise by 11%. Investment products remain only 1.4% of total volumes on trusted exchanges.”

It is worth noting that Bitcoin products marked the most significant gain, amounting to $116 million. However, there were some minor inflows into short-bitcoin, totaling $4.4 million, which suggests opinion remains polarized. The report added:

“Multi-asset investment products saw outflows for the 9th consecutive week totalling US$6.4m, suggesting investors are preferring select investments. This was evident in altcoins as Solana, Cardano and Polygon all saw inflows, while Bitcoin Cash, Stellar and Uniswap all saw minor outflows.”

Germany saw the largest inflows, accounting for 40% or $46 million of all inflows. This was followed by Canada, the United States, and Switzerland, which saw $30 million, $26 million, and $23 million in inflows, respectively.

As reported, digital asset inflows totaled $433 million in 2022, the lowest in four years. Bitcoin and multi-asset investment products saw the most robust demand, recording inflows of $287 million and $209 million, respectively. On the other hand, Ethereum saw strong outflows of $402 million in 2022, a sharp reversal compared to the previous two years.

Meanwhile, short-investment products saw inflows of $108 million in 2022. While this remains a niche access class, representing just 1.1% of all Bitcoin AUM, it had still marked a notable increase from 2021, when short Bitcoin investment products recorded inflows of just $2 million.

Digital Asset Funds and Institutional Demand

Digital asset fund flows, also referred to as asset flows, measure the net movement of cash into and out of investment vehicles like mutual funds and exchange-traded funds (ETFs). The movement of money into the funds is called inflows, while outflows reflect share redemptions or when investors take their money out of a fund.

Fund flows can be a good measure to gauge how institutional investors move their money. Inflows may suggest that investors are optimistic about potential future returns. On the other hand, outflows could suggest investors are becoming wary of the market.

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