Institutional Crypto Investments Dropped 95% to $433 Million in 2022


Crypto fund investments in 2022 were the lowest they’ve been since 2018, according to a new CoinShares report.

“Digital assets saw inflows—investors putting money into crypto products—totaling $433 million for the whole of 2022, the lowest since 2018 when there were inflows of only $233 million,” James Butterfill, CoinShares head of research, wrote in the report.

That’s a 95% decrease compared to 2021, when inflows totaled $9.1 billion, and a 93% drop from 2020, when inflows totaled $6.6 billion.

Last year was an especially hellish one for crypto markets. The global crypto market cap started the year at $2.3 trillion and ended it at $829 million, according to CoinGecko. That’s a loss of roughly 64% of the value that used to be in crypto markets.

The CoinShares fund flows report specifically tracks activity in exchange-traded products or instruments for gaining exposure to crypto products. That includes funds like Grayscale’s Bitcoin Trust or Digital Asset ETPs from 21Shares. They have been a popular way for institutional investors to get involved in the crypto market, even if they or their clients aren’t entirely comfortable HODLing crypto assets directly.

Not all of those products are designed for investors with an optimistic stance on crypto.

Although they represented only 1.1% of total Bitcoin inflows—still a “niche asset”—Butterfill did note that short-investment products saw inflows of $108 million. To short an asset is to bet against it and profit when (and if) the asset does, in fact, fall in price.

Back in November, in the midst of ongoing fallout from FTX’s bankruptcy filing, Butterfill noted on Twitter that inflows to short-investment products had reached a new record.

“Short-investment product inflows represented 75% of the total inflows, suggesting on aggregate sentiment was deeply negative for the asset class,” he wrote in a November 21 report, “while [assets under management] is now at the lowest point in 2 years at $22 billion.”

As dire as that sounded, things have gotten worse since. Assets under management dropped from $22.2 billion to $21.8 billion in assets held in exchange-traded crypto funds, according to the latest update.

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