Spot Bitcoin ETFs turn 1 – Assessing what’s done and what’s next in 2025

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  • Spot Bitcoin ETFs revolutionized finance, amassing $660 billion in trading volume by 2024
  • Ethereum ETFs showed resilience too, closing 2024 with $35 billion in inflows despite challenges

11th January 2025 signified a year since the launch of U.S Spot Bitcoin [BTC] ETFs, a historic milestone that significantly altered the crypto market and traditional finance sectors.

The 11th of January 2025 represented one year from the debut of U.S Spot Bitcoin [BTC] ETFs, an extraordinary event that drastically reshaped both the cryptocurrency scene and conventional finance.

By January 10th, 2024, these ETFs were given approval by the U.S. Securities and Exchange Commission (SEC). Over the course of the year, they grew to be a significant player, accumulating the entire $44.2 billion in worldwide crypto investment inflows by the end of 2024.

Bitcoin ETFs’ 1-year performance recap

Pioneers such as BlackRock, Fidelity, and Grayscale have been instrumental in shaping the market’s dynamics. Particularly, Grayscale managed to gain an advantage by transforming an existing product into an Exchange-Traded Fund (ETF), which launched with a substantial $29 billion in assets under management.

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Additionally, the initial year of Spot Bitcoin ETFs was characterized by extraordinary trading volume. As per The Block’s Data Dashboard, the cumulative trading volume in just their first month reached a staggering $38 billion. By the six-month point, this figure had skyrocketed to around $323 billion and surpassed an impressive $660 billion by the end of the year.

Out of all the ETFs examined, BlackRock’s iShares Bitcoin Trust ETF (IBIT) set a new standard, accumulating an impressive $61 billion in assets under management (AUM) within just one year. This remarkable accomplishment surpassed its Gold ETF, which required twenty years to build up $33 billion in AUM.

Analyst weighs in on IBIT’s success

Remarking on the same, Bloomberg ETF analyst James Seyffart said, 

The expansion of IBIT is remarkable and unparalleled. It has broken speed records, surpassing milestones more swiftly than any other Exchange-Traded Fund (ETF) across all asset classes.

Nevertheless, IBIT’s influence went beyond just spot trading, reaching into the realm of options trading as well. This was pointed out by Greg Magadini, the Director of Derivatives at Amberdata.

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In 2024, I was part of the team that witnessed an impressive $37 billion pour into our ETF, representing a remarkable 83% share of all U.S. cryptocurrency ETF inflows. This undeniably fortified our position as the industry’s front-runner and market leader.

On the other hand, the significant achievement has sparked worries over the sustainability of smaller Bitcoin ETFs. These are now under growing pressure as they struggle to distinguish themselves in a market that overwhelmingly favors the prominence of IBIT.

Talking to a publication, Bitwise Chief Investment Officer Matt Hougan noted, 

In various markets, some Exchange-Traded Funds (ETFs) are larger while others are smaller. There’s usually a mix, and sometimes you’ll find a few ETFs that are extremely large. However, no market will ever have an ETF that holds all the assets, and in those attracting tens of billions, there’s always more than one highly successful ETF.

Factors responsible for BTC ETF success

According to Hougan, the reason for the prosperity of Spot Bitcoin ETFs lies in elements such as Bitcoin’s continuous price increase, consistent interest from investors, the occurrence of the fourth halving in April, and worries about mounting U.S. debt.

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As a researcher, I find myself intrigued, even though we witnessed an outflow of approximately $149.4 million on the last trading day. However, this seemingly significant event has failed to ruffle the feathers of analysts, who are instead redirecting their attention towards a potential Bitcoin supply shock. This shift in focus is driven by the burgeoning demand for Bitcoin ETFs.

Additionally, Ethereum [ETH] ETFs are experiencing increased popularity, ending 2024 with approximately $35 billion in investments, despite losing $68.5 million on the final trading day. This persistence indicates a growing faith in Ethereum’s long-term prospects.

Therefore, it is anticipated that if current tendencies continue, the year 2025 might mark a significant turning point for Ethereum ETFs, as they could challenge Bitcoin ETFs and transform the overall cryptocurrency investment sector.

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2025-01-12 13:11