Crypto Fund Flows Dropped From $9.1B to $433M — But Beat 2018 Levels

Ethereum investment products dragged down an already rough year for flows into digital asset investment products, CoinShares report finds

article-image

phanurak rubpol/Shutterstock.com modified by Blockworks

share

Net flows into digital asset investment products in 2022 hit their lowest levels since 2018, though the total remained positive despite steep declines in crypto prices.

Inflows into crypto products were $433 million last year — down from $9.1 billion in 2021 and $6.6 billion in 2020, according to CoinShares. The 2022 flow total was nearly double the level seen during a tumultuous 2018, a bear market year that saw $233 million enter digital asset products. 

Though total weekly outflows at one point reached 1.8% of total assets under management in 2018, outflows in 2022 never rose above 0.7% of total assets in the space.

“In a year where bitcoin prices fell by 63%, a clear bear market precipitated by irrational exuberance and an overly hawkish Fed, it is encouraging to see investors on the whole still choosing to invest, and in many cases tactically adding to positions during price weakness,” CoinShares Head of Research James Butterfill said in a Wednesday blog post.

Bitcoin and multi-asset investment products notched inflows of $287 million and $209 million in 2022, respectively. 

The SEC has yet to approve a spot bitcoin ETF in the US. Industry participants said in November the collapse of crypto exchange FTX makes the chance of the regulator greenlighting one any time soon even more slim. 

Products shorting crypto emerged during the year, gathering $108 million of net inflows. The ProShares Short Bitcoin Strategy ETF (BITI), which began trading in the US in June, has about $100 million in assets under management, according to ETF.com. Still, the category represents just 1.1% of total assets under management in bitcoin products.

Institutions expected to wait for Ethereum staking withdrawals

The largest outflows came from Ethereum products, which leaked $402 million. These negative flows came during a year in which the blockchain moved to a proof-of-stake consensus. 

Read more: Proof-of-Work vs. Proof-of-Stake: What’s the Difference?

“Ethereum had a tumultuous year which we believe was due to investor concerns over a successful transition to proof of stake and continued issues over the timing of un-staking, which we believe will occur in Q2 2023,” Butterfill said. 

Ethereum moving to proof of stake completely changes the investment case for ether, industry participants have said

But some institutional investors are likely to wait for Ethereum’s Shanghai upgrade, which is expected to enable staking withdrawals. 

Staked ether withdrawals are expected to come as soon as March. 

Falling outside the scope of the report, ETFs investing in companies related to the crypto industry had a rough year.  

While several so-called blockchain ETFs beat the performance of bitcoin in 2022, plenty did not. As such funds are often tied to crypto prices, some industry watchers said, many of the offerings have an uncertain future.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495B in value locked, doubling Uniswap's Base deployment.

article-image

Securitize CEO Carlos Domingo thinks BUIDL will potentially hit its next $500 million milestone in just a few months

article-image

Representatives on Thursday opted to back President Biden and uphold his veto of the legislation that sought to invalidate SAB 121

article-image

The former Valkyrie CEO chats with Blockworks about what she has her eye on as Cypherpunk Holdings’ new leader

article-image

Thursday’s CPI report shows prices are coming down more quickly than analysts had anticipated, renewing hope that central bankers will cut rates in the fall

article-image

If we tokenize all assets in a speculative rush, the risk of creating illiquid markets and trapped value will manifest on a large scale

article-image

Plus, Trump is headed to the heart of Bitcoinlandia with a speaking appearance at the Bitcoin 2024 conference