Cryptocurrency products and funds witnessed a 36 per cent jump in inflows during 2021 from the preceding year as institutional investors continued to bet on digital assets amid price volatility and uncertainty throughout the year. The inflows increased from $6.8 billion in 2020 to $9.3 billion in 2021 even as the growth from 2019 to 2020 was significantly higher at 806 per cent, digital asset management firm CoinShares said in its annual summary of digital asset fund flows.
“We believe this represents a maturing industry, with total assets under management (AuM) ending the year at $62.5 million in 2021 versus just $2.8 billion at the end of 2019,” James Butterfill, investment strategist at CoinShares wrote in the report on Tuesday. Bitcoin had the maximum AUM share at $39.7 billion while 2021 inflows were at $6.3 billion, with year-on-year growth of 16 per cent from $5.4 billion in 2020.
However, Bitcoin saw the lowest growth in inflows relative to other digital asset investment products in 2021. For instance, Ethereum saw 50 per cent growth from $920 million to $1.3 billion although in the most recent round of negative sentiment, it saw four weeks of outflows totalling $161 million. Among other assets, Binance AUM recorded a 2,500 per cent jump from $1 million to $26 million while Litecoin jumped 77 per cent from $77 million to $93 million. Ripple too jumped 1,160 per cent from $5 million to $63 million.
Crypto market cap had jumped nearly 300 per cent from $763 billion at the beginning of 2021 to $3 trillion in November before it declined to $2.2 trillion by the end of 2021 as prices for multiple cryptocurrencies dipped from record levels during the year. According to the data from Coinmarketcap.com, Bitcoin had declined from nearly $69,000 to $46,000 while Ethereum dropped from $4,800 to $3,600 and Binance Coin declined from $675 to $511, among others during 2021.
CoinShares noted that the total number of coins in investment product form had increased from nine to 15. Moreover, 37 investment products were launched in 2021 in comparison to 24 in 2020. The overall count stood at 132 indicating the demand and popularity of digital assets.
Importantly, while the last week of 2021 saw third-week outflows worth $32 million, the trend suggested diminishing outflows following the record weekly outflows mid-December. Outflows during the week of December 13 stood at $142 million – first following a 17 week run of inflows and the largest weekly outflow on record.