Key Points
- Spot Bitcoin ETFs revolutionized finance, amassing $660 billion in trading volume by 2024.
- Ethereum ETFs also showed resilience, closing 2024 with $35 billion in inflows despite challenges.
Bitcoin ETFs Transform Finance
The first anniversary of U.S Spot Bitcoin ETFs was marked on 11 January 2025. This development significantly impacted both the cryptocurrency and traditional finance sectors.
The U.S. Securities and Exchange Commission (SEC) approved these ETFs on 10 January 2024. They quickly became a dominant force, accounting for all of the $44.2 billion in global crypto investment inflows by the end of 2024.
Performance Recap & Market Leaders
Early market leaders like BlackRock, Fidelity, and Grayscale set the pace. Grayscale gained an edge due to its seamless conversion of an existing product into an ETF, debuting with a significant $29 billion in assets under management.
The debut year of Spot Bitcoin ETFs was marked by staggering trading activity. Cumulative volumes surpassed $38 billion in their first month alone. By the six-month mark, trading volumes had surged to approximately $323 billion, eventually exceeding an impressive $660 billion by year-end.
BlackRock’s iShares Bitcoin Trust ETF (IBIT) stood out as a record-breaker, amassing $61 billion in assets under management (AUM) within a year. This feat outpaced its Gold ETF, which took two decades to achieve $33 billion in AUM.
Analysts’ Take on Bitcoin ETFs
Bloomberg ETF analyst James Seyffart said, “IBIT’s growth is unprecedented. It’s the fastest ETF to reach most milestones, faster than any other ETF in any asset class.”
Despite this success, concerns have been raised about the viability of smaller Bitcoin ETFs. They face increasing pressure to differentiate themselves in a market heavily skewed toward IBIT’s popularity.
Bitwise Chief Investment Officer Matt Hougan noted, “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.”
Factors Behind BTC ETF Success
The success of Spot Bitcoin ETFs stems from factors like Bitcoin’s price growth, sustained investor demand, April’s fourth halving, and concerns over rising U.S debt, according to Hougan.
Analysts remain unfazed by $149.4 million in outflows on the last trading day, shifting focus to a potential Bitcoin supply shock driven by surging demand for these ETFs.
Meanwhile, Ethereum ETFs are gaining traction too, closing 2024 with $35 billion in inflows despite $68.5 million in outflows on the last trading day. This resilience is a sign of growing confidence in Ethereum’s long-term potential.
Analysts predict that if trends persist, 2025 could be pivotal for Ethereum ETFs, positioning them to rival Bitcoin ETFs while reshaping the crypto investment landscape.