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Digital asset inflows soar to record highs as BTC, SOL take center stage
More funds came into digital assets in 2023, with Bitcoin and Solana leading the way.
- Digital asset flow saw the third-highest volume in 2023.
- Bitcoin and Solana led the pack of assets with the highest inflow for the past year.
The price of digital assets rose towards the end of the year, which was evident in the fund flow. Bitcoin [BTC] and Solana [SOL] were the top performers, attracting the most funds, and the overall volume of funds inflow reached a record high.
Inflows hit a record high in 2023
Recent data from Coinshares showed that in 2023, digital assets experienced the third-highest volume of funds inflow. The report indicates a total inflow of $2.25 billion for digital asset products.
When comparing the inflows over the years, 2020 saw $6.6 billion, and 2021 had $10.7 billion. Notably, the inflow gained momentum towards the end of the year.
The chart highlights Bitcoin and Solana as major contributors to the inflows, and the positive sentiment surrounding the approval of the BTC spot ETF also played a role in the funds directed towards Bitcoin.
Bitcoin and Solana lead inflow volume
Bitcoin witnessed a substantial influx of $1.9 billion, constituting 87% of the total flows. Additionally, Solana experienced the second-highest inflow for the year, with total inflows reaching US$167 million, accounting for 20% of the Assets under Management (AuM).
As mentioned, Bitcoin saw increased inflows towards the year-end, attributed to growing confidence regarding spot ETF approvals.
Similarly, Solana’s inflows surged notably in the later part of the year, accompanied by price increases surpassing the levels seen in 2022.
How Bitcoin and Solana have trended so far
Examining the daily timeframe chart of Bitcoin showed that since reaching the $40,000 price level, it has sustained that position despite some fluctuations.
During this period, BTC witnessed significant accumulation, underscoring the substantial volume of inflows it experienced. The chart indicates a positive start to the year, with a gain of over 5%, reaching the $45,000 price range.
Source: Trading View
However, a setback occurred on 3rd January, resulting in a substantial loss of gains. Yet, there was a modest recovery on 4th January. At the time of this writing, Bitcoin was trading at around $43,870, with a marginal loss of less than 1%.
Similarly, a review of Solana’s price trend showed a strong year-end, reaching its peak around 25th December at $120. It provided holders with a noteworthy Christmas present.
Despite a subsequent decline, Solana has upheld the $100 price range. Currently, SOL is trading at around $101, experiencing a drop of over 3% at the time of this update.
Source: Trading View
Sentiment remains low after crash
An examination of the Bitcoin and Solana funding rates on Coinglass indicated a persistently low sentiment surrounding these assets.
Around 2nd January, BTC and SOL witnessed their funding rates reaching the highest in over five months. However, these rates experienced a substantial decline after the price drop and the extensive liquidation of long positions.
This suggested that while some traders were still optimistic about price increases, the overall number of traders taking this stance had decreased.
As of this writing, the funding rates for BTC and SOL were around 0.009% and 0.01%, respectively. This showed a continuing subdued sentiment in the market, reflecting the cautious approach of traders in light of recent market dynamics.
Even though the year has only just begun, there is a growing likelihood that Bitcoin could secure a significant portion of inflows for the year. This speculation is rooted in the potential approval of spot ETFs, which could amplify the influx of institutional funds.
Read Bitcoin (BTC) Price Prediction 2024-25
However, the competition for the second position remains open, as various assets demonstrate promising factors that might attract additional investors.
The evolving landscape suggests that the distribution of investment interest among different assets will be a key dynamic to watch throughout the year.
