Crypto Investment Inflows Increased 36% in 2021

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In Brief
  • Totaling at $9.3 billion, inflows into digital asset investment products increased 36% in 2021 compared to the year prior.

  • Despite being significantly lower than the previous year’s proportional gain of 806%, the latest CoinShares report believes “this represents a maturing industry.”

  • Although crypto investment products saw significant gains over the past year, 2021 concluded with three weeks of outflows.

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Totaling at $9.3 billion, inflows into digital asset investment products increased 36% in 2021 compared to the year prior.

Despite being significantly lower than the previous year’s proportional gain of 806%, the latest CoinShares report believes “this represents a maturing industry.” The report also cites the total assets under management (AuM) growing from $2.8 billion at the end of 2019 to $62.5 billion by the end 2021 as a major indicator of the market’s development.

In addition to greater volume, the amount of investment products based on cryptocurrencies also expanded this past year. For instance, the total number of coins included in investment products grew from 9 to 15. Additionally, 37 investment products were launched in 2021, compared to 24 in 2020, which now brings the total to 132.

Relative to other digital asset investment products, those based on Bitcoin experienced the lowest growth in inflows over 2021, seeing a year-on-year increase of only 16%, after rising from $5.4 billion last year to $6.3 billion. Meanwhile, inflows into Ethereum-based investment products more than doubled in 2021 to $1.3 billion from $920 million at the end of 2020. In spite of these overall gains, Ethereum-based products saw outflows grow to $161 million in the final month of the year.

Diminishing outflows

Although crypto investment products saw significant gains over the past year, 2021 concluded with three consecutive weeks of outflows. Despite continuing the negative trend, the final week of the year saw a diminishing amount of outflows at $32 million, compared to $86 million the week prior, and $142 million the week before that. At a total of $260 million, the total outflows for the final 3 weeks of last year amounted to 0.4% of AuM.

The initial week of outflows ended a streak of 17 consecutive weeks of inflows into digital asset investment products. It had been triggered by statements from the US Federal Reserve regarding a faster-than-expected tapering of its asset purchases, which had adversely affected all risk assets, not just crypto-based ones. 

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.

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