In the United States, the initial year of Bitcoin exchange-traded funds (ETFs) surpassed all predictions, making a groundbreaking entrance that significantly altered both the Bitcoin industry and conventional finance.
On January 11, 2024, U.S. Bitcoin (BTC) ETFs commenced trading a day after receiving approval from the Securities and Exchange Commission on the 10th.
In under a year, they have been responsible for all the $44.2 billion that flowed into cryptocurrency investment products worldwide.
In commemoration of a year since Bitcoin ETFs were introduced in the U.S., CryptoMoon sought opinions from various ETF issuers and financial experts on why the United States emerged as the world’s premier hub for Bitcoin ETFs in 2024.
US spot Bitcoin ETFs: Expectations vs. reality
Since their launch, the rate at which U.S. spot Bitcoin ETFs have been receiving investments has been rapid and unexpectedly high, leaving industry experts in awe at the speed of its acceptance.
As a researcher, I was pleasantly surprised to find that our projections for the year’s total were a substantial $14 billion, significantly exceeding our initial expectations and outpacing almost every other prediction, as I shared with CryptoMoon.
As a crypto investor, I’ve been marveling at the swift growth of BlackRock’s Bitcoin ETF. In just under a year, it amassed an impressive $61 billion in assets under management (AUM). On the other hand, their gold ETF took a full two decades to reach a similar milestone of $33 billion AUM, as pointed out by Butterfill.
Matt Mena, a cryptocurrency research strategist at 21Shares, expressed strong optimism towards the launch of US Bitcoin ETFs, stating that the crypto community has been anticipating them for more than ten years. He initially predicted a $15 billion inflow, but the actual figures surpassed his expectations dramatically.
According to VettaFi’s head of sector and industry research, Roxanna Islam, we had anticipated a successful debut for the Bitcoin ETF, but surprisingly, its influence has turned out to be significantly more substantial than we initially thought, after one year.
Best-performing ETF launch of all time
In 2024, one key factor contributing to the massive success of US Bitcoin ETFs was the prolonged interest and need among institutional investors to invest in Bitcoin without dealing with the complications of self-storage or direct cryptocurrency possession, as stated by Mena.
As a crypto investor, I’ve taken note of Mena’s points about potential interest rate reductions by the U.S. Federal Reserve and forthcoming crypto-friendly policies under the new administration of President-elect Donald Trump. This information has piqued my curiosity regarding the possible impact on the crypto market.
According to Bitwise’s Chief Investment Officer, Matt Hougan, the steady growth in Bitcoin’s value and ongoing interest from investors have made U.S. spot Bitcoin exchange-traded funds (ETFs) the most successful ETF debuts ever recorded.
“Bitcoin is the best-performing asset in history.”
According to Hougan, broader occurrences such as Bitcoin’s fourth halving in April and worries over increasing U.S. debt were additional elements playing a role.
As an analyst, I can attest that one factor enhancing the success of ETFs is their timely introduction during a historically low period in Bitcoin’s price, as asserted by CoinShares’ Butterfill.
Additionally, the SEC’s approval played a significant role because it alleviated investor concerns about potential bans on Bitcoin altogether, as he pointed out.
What’s next for US spot Bitcoin ETFs?
In 2024, U.S. Bitcoin ETFs exceeded all predictions, and experts and analysts believe they’re poised for another impressive performance in the upcoming year.
Bitwise’s Hougan stated that ETFs (Exchange Traded Funds) are long-term narratives. In most instances, inflows during the second year surpass those of the first year. This is because a larger number of investors tend to get involved with these products in the following year.
“The reality is that most professional investors still are prohibited from accessing Bitcoin ETFs. That will change in 2025, and I expect 2025 flows to significantly exceed 2024’s.”
VettaFi anticipates that the positive trend will persist until 2025, and as the overall cryptocurrency sector expands, so too will the environment for crypto exchange-traded funds (ETFs),” according to Islam’s statement.
In 2024, the BlackRock iShares Bitcoin Trust (IBIT) ETF attracted an impressive $37 billion in investments, representing 83% of all Bitcoin ETF inflows from the U.S. This massive growth has led some to ponder whether smaller Bitcoin ETFs can continue thriving in this competitive market.
On the contrary, Bitwise’s Hougan stated that a situation in which issuers such as BlackRock are taking over demand for other Bitcoin ETFs at the expense of others is currently not materializing.
Hougan noted that when examining markets with several ETFs offering comparable exposure, it’s common to discover that assets are spread across these different ETFs.
“Some are bigger, and some are smaller, and there are often one or two really large ETFs. But there is no market where one ETF gathers 100% of the assets, and in markets that attract tens of billions in assets, there are consistently multiple very successful ETFs.”
According to CoinShares’ Butterfill, U.S. Bitcoin ETFs are expected to remain dominant players in the worldwide cryptocurrency ETF sector, outshining any other market for the foreseeable future.
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2025-01-10 18:05