Important points
- Launched a year ago, the Spot Bitcoin ETF has made it easier for investors to gain exposure to the cryptocurrency.
- Investors poured billions of dollars into Bitcoin ETFs, driving the price of Bitcoin to multiple all-time highs during 2024.
- The success of the Spot Bitcoin ETF led to the approval of the Spot Ether ETF, and we may soon see approval for other crypto assets as well.
In its first full year of trading, the Spot Bitcoin exchange-traded fund may have fundamentally changed the way investors view crypto investing.
The Spot Bitcoin ETF began trading on January 11, 2024, opening the cryptocurrency market to a wider range of investors and paving the way for more such products. The launch also helped push Bitcoin (BTCUSD) prices to a series of record highs as investors poured billions of dollars into the ETF.
Here's what's happened since the launch of the Spot Bitcoin ETF.
ETFs have made investing in Bitcoin more accessible
Spot Bitcoin ETFs have made it easy for investors to gain exposure to cryptocurrencies.
Typically, if you want to buy Bitcoin, you need a cryptocurrency wallet and you need to buy tokens from a cryptocurrency exchange. If you choose a Bitcoin ETF instead, you can purchase the product using your brokerage account just like you would with any other ETF.
Investors have poured billions of dollars into spot Bitcoin ETFs because of their ease of use. That enthusiasm is shared by individual and institutional investors alike, with traditional Wall Street firms and hedge funds getting in on the action.
Bitcoin is often referred to as digital gold, and Bitcoin ETFs are rapidly gaining popularity over gold ETFs.
BlackRock's iShares Bitcoin Trust (IBIT) is one of the most popular ETFs, with over $37 billion in net inflows to date. The fund has experienced incredible growth, with over $52 billion in assets as of January 9, significantly exceeding the iShares 20-year gold ETF (IAU)'s $33 billion in assets, and SPDR Gold. It is approaching the market share (GLD). The largest gold ETF with over $75 billion in assets.
Bitcoin ETF halved, price rises after Trump victory
Spot Bitcoin ETF holds cryptocurrencies as the underlying asset. Therefore, the more people put money into the ETF, the more Bitcoin the ETF has to buy. This demand pushed Bitcoin prices to record highs last year.
On January 10, the day the Securities and Exchange Commission approved Bitcoin ETFs to begin trading, Bitcoin was trading at nearly $46,000. In the ETF's first few weeks of trading, its price dipped below $40,000, but has since recovered to hit a new high of more than $73,000 in March, ahead of Bitcoin's halving.
Bitcoin halving is an event that occurs approximately every four years and slows down the pace at which new Bitcoins are created. Tight supply and strong demand from ETFs created an imbalance that drove up prices.
Donald Trump's victory in November's presidential election was another shock as investors expected a crypto-friendly White House and Congress to adopt policies supportive of the crypto class. . Bitcoin hit multiple all-time highs in the weeks following the election, rising to $108,000 in mid-December. The digital currency was valued at $95,000 as of Friday afternoon.
Bitcoin ETFs pave the way for further products
The success of the Spot Bitcoin ETF has also led to the approval of other regulated crypto-specific financial products, such as the Spot Ether ETF (ETHUSD) and options trading on the Spot Bitcoin ETF.
The Trump administration, which is scheduled to take office on January 20th, is expected to ease regulations on cryptocurrencies, which could lead to the approval of even more crypto ETFs.
Proposals for XRP (XRPUSD) and Solana (SOLUSD) ETFs have already been filed with the SEC. Additionally, Bloomberg ETF analysts believe that Litecoin (LTCUSD) and Hedera (HBARUSD) could receive ETF approval in 2025, following the approval of a combined Bitcoin and Ether ETF.
