Crypto Investment Products' AUM Surge as Sector Continues to Outperform Traditional Investments

Cryptocurrency investment products have continued to see positive growth in the early months of 2023, with total assets under management (AUM) reaching a record high of $28.3b billion in February, up 5.25% from the previous month, at a time in which digital assets keep outperforming traditional investments.

According to CryptoCompare’s latest Digital Assets Management Review report, the rise in assets under management marked the third consecutive monthly increase, and highlights a growing appetite for cryptocurrencies among investors.

Per the report, Bitcoin ($BTC) and Ethereum ($ETH)-based accounted for 70.5% and 24.0% of the total AUM market share, with their AUM increasing by 6.06% and 1.72%, respectively, despite the Securities and Exchange Commission’s recent enforcements against crypto firms, including Paxos over BinanceUSD.

The AUM for products based on other digital assets and for those offering exposure to multiple assets also saw an increase of 14.7% to $1.16 billion and 2.33% to $413 million, respectively.

CryptoCompare’s report also details that digital assets have kept on outperforming traditional assets in 2023, with the AUM of products based on BTC and ETH steadily rising as a result. Although the correlation between digital assets and traditional assets has been rising, it has recently stabilized and is expected to decrease as innovation fuels interest in digital assets.

In February, the correlation between BTC and traditional assets decreased, with BTC-GOLD showing the most significant correlation shift among the monitored assets.

The report also reveals that Bitcoin-based products dominated average weekly net flows in February, with both BTC-based products and Short BTC products recording positive flows of $5.3 million and $4.6 million, respectively.

Solana-based products also sustained their momentum with positive net flows, receiving $600,000 in inflows. However, Ethereum-based products and multi-asset products experienced negative net flows of $400,000 and $2.1 million, respectively.

This suggests that investors may be reallocating their funds away from these assets and towards those that are perceived to have stronger growth potential.

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