The first year of the Spot Bitcoin Exchange Traded Fund (ETF) in the US exceeded all expectations, marking a historic debut that reshaped both the Bitcoin market and traditional finance.
It received approval from the U.S. Securities and Exchange Commission on January 10, 2024, and trading for the U.S. Spot Bitcoin (BTC) ETF began the next day.
In less than a year, they contributed 100% of the $44.2 billion inflow into crypto investment products worldwide.
To commemorate the one-year anniversary of the launch of ETFs in the US, Cointelegraph reached out to multiple ETF providers and analysts for insight into why the US will become the global leader in Bitcoin ETFs in 2024. Ta.
US Spot Bitcoin ETF: Expectations and Reality
The pace of inflows into U.S. spot Bitcoin ETFs has been strong since their inception, with industry leaders surprised by the pace of adoption.
James Butterfill, head of research at CoinShares, told Cointelegraph: “Our forecast is $14 billion per year, which is quite conservative and clearly far exceeds our expectations and exceeds almost every other forecast. It was much higher than that.”
BlackRock's Bitcoin ETF reached $61 billion in assets under management (AUM) in less than a year, while the gold ETF took 20 years to reach $33 billion in AUM, Butterfill noted.
“The crypto community has been talking about US Bitcoin ETFs for over a decade, so I was very bullish on the spot,” said Matt Mena, crypto research strategist at 21Shares. “I expected net inflows to be $15 billion, but this event has completely blown away my expectations,” he added.
“While we expected the launch of the Spot Bitcoin ETF to be a success, the impact a year later has been much larger than we expected,” said Roksanna Islam, head of sector and industry research at VettaFi.
Launch of the best-performing ETF in history
One of the reasons for the huge success of the U.S. Spot Bitcoin ETF in 2024 is due to long-standing expectations from institutions to gain exposure to Bitcoin without the complexity of self-custody or direct ownership of the cryptocurrency. Demand, Mena said.
Mena also mentioned interest rate cuts by the US Federal Reserve and promising crypto policy under President-elect Donald Trump's administration.
Bitwise Chief Investment Officer Matt Hogan said Bitcoin's rising price and years of demand have made the U.S. Spot Bitcoin ETF the best-performing ETF in history.
“Bitcoin is the best-performing asset in history.”
Hogan said broader events were also a factor, including Bitcoin's fourth halving in April and concerns about rising U.S. debt.
Since the SEC approval, the price of Bitcoin has increased by 103%. Source: CoinGecko
CoinShares' Butterfill said another reason that contributed to the ETF's success was that it was introduced at a time when bitcoin prices were historically low.
The SEC approval itself was also a big factor in allaying investors' fears that regulators would ban Bitcoin completely, he added.
What's Next for the US Spot Bitcoin ETF?
After defying all expectations in 2024, the U.S. spot Bitcoin ETF is poised for another strong year, industry executives and analysts agree.
“ETFs are a multi-year story,” Bitwise's Hogan said, adding that second-year inflows will “in almost all cases”1 as more investors will have access to the product next year. He added that there is a tendency for the results to exceed those of the previous year.
“The reality is that most professional investors are still prohibited from accessing Bitcoin ETFs. We expect that to change in 2025, with flows in 2025 significantly exceeding flows in 2024. ”
“We expect this momentum to continue into 2025, with the crypto ETF ecosystem expanding as the broader crypto industry grows,” VettaFi’s Islam said.
Related: Bitcoin ETF raises nearly three times as much BTC as December production
Smaller numbers of crypto ETFs are expected to rise as BlackRock's iShares Bitcoin Trust (IBIT) ETF dwarfed Bitcoin ETFs with $37 billion in inflows, accounting for 83% of all crypto ETF inflows from the US in 2024. Some may question whether Bitcoin ETFs can survive.
However, a scenario where issuers like BlackRock gradually displace demand for other Bitcoin ETFs is not occurring, Bitwise's Hogan said.
“If you look at any area of the market where multiple ETFs offer similar exposure, you'll find that assets are diversified across those ETFs,” Hogan said, adding:
“Some are bigger, some are smaller, and there are often one or two very large ETFs. But there is no market where one ETF collects 100% of the assets, and there are hundreds of In a market with billions of assets, there are always several very successful ETFs.”
CoinShares' Butterfill also suggested that U.S. Bitcoin ETFs will continue to dominate the global crypto ETF industry and that other markets are unlikely to displace them in the coming years.
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