On January 11, 2025, it was a significant milestone for U.S. Spot Bitcoin [BTC] ETFs as they celebrated their first year. This milestone reshaped the cryptocurrency market and traditional financial systems.
Following approval by the U.S. Securities and Exchange Commission (SEC) on January 10, 2024, these ETFs quickly became a major player, contributing to the entire $44.2 billion in global crypto investments by the end of 2024.
A Year in Review for Bitcoin ETFs
Key players like BlackRock, Fidelity, and Grayscale led the way. Notably, Grayscale’s adaptation of an existing product into an ETF gave them an advantage, starting with a substantial $29 billion in assets under management.
The debut year of Spot Bitcoin ETFs saw remarkable trading activity. The Block’s Data Dashboard reported that trading volumes exceeded $38 billion in the first month alone. By the six-month mark, trading volumes had surged to around $323 billion, eventually surpassing an impressive $660 billion by the end of the year.
Among these, BlackRock’s iShares Bitcoin Trust ETF (IBIT) stood out, accumulating $61 billion in assets under management within a year. This achievement overshadowed its Gold ETF, which took twenty years to reach $33 billion in assets under management.
Expert Analysis on IBIT’s Success
Commenting on this, Bloomberg ETF analyst James Seyffart remarked,
“The growth of IBIT is unparalleled. It has set records for reaching milestones quicker than any other ETF across asset classes.”
However, IBIT’s influence extended beyond spot trading and also made a mark in the Options market, as per Greg Magadini, Director of Derivatives at Amberdata.
With $37 billion in inflows, IBIT garnered an impressive 83% share of all U.S. crypto ETF inflows in 2024, solidifying its dominant position in the market.
Nonetheless, this overwhelming success has raised concerns about the sustainability of smaller Bitcoin ETFs, which now face the challenge of standing out in a market heavily tilted towards the popularity of IBIT.
In a conversation with a media outlet, Bitwise Chief Investment Officer Matt Hougan mentioned,
“While some ETFs may be larger or smaller, with usually one or two larger ETFs, no single ETF captures the entire market share, especially in markets attracting billions of dollars in assets, giving room for several successful ETFs.”
Key Drivers of Bitcoin ETF Success
The success of Spot Bitcoin ETFs can be attributed to factors such as Bitcoin’s price surge, sustained investor interest, the fourth halving in April, and concerns regarding increasing U.S. debt, as outlined by Hougan.
Despite witnessing $149.4 million in outflows on the last trading day, analysts remain optimistic, focusing on a potential supply shock in Bitcoin due to rising demand for these ETFs.
Moreover, Ethereum [ETH] ETFs have gained momentum, concluding 2024 with $35 billion in inflows, despite facing $68.5 million in outflows on the last trading day. This resilience signals growing confidence in Ethereum’s long-term prospects.
Therefore, analysts predict that if current trends persist, 2025 could be a significant year for Ethereum ETFs, positioning them to compete with Bitcoin ETFs and reshape the cryptocurrency investment landscape.