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The first ever set of spot Bitcoin ETFs was approved in the United States on 10th January 2024. In their first year of trading, they have drawn in a total of $36.3 billion in net inflows (according to data from Farside Investors). This was a milestone in crypto history, referred to by many in the industry as a “holy grail moment”. The spot Bitcoin ETFs were approved by the Securities and Exchange Commission (SEC), headed up by Gary Gensler, who recently stepped down to make way for a new chair, Paul Atkins, nominated by President Trump in December 2024.
What is a spot Bitcoin ETF?
A spot Bitcoin ETF (exchange-traded fund) is an investment fund that tracks the real and current price of Bitcoin by holding actual Bitcoin in a reserve. These funds allow traders and investors exposure to Bitcoin’s value without them having to purchase the cryptocurrency directly. This format has appealed greatly to more traditional investors, allowing them to add a spot Bitcoin ETF to their portfolio and keep all their assets in one space.
On the 10th of January 2024, a total of 11 spot Bitcoin ETFs were approved, launched by iShares, Grayscale, Bitwise, Fidelity, Invesco Galaxy, ARK 21Shares, VanEck, CoinShares Valkyrie, WisdomTree, Franklin and Hashdex. The launch of these funds was expected to drive higher institutional adoption and provide broader access for retail investors, potentially increasing Bitcoin’s liquidity and market stability over time.
How have the 11 spot Bitcoin ETFs performed?
Over 2024, spot Bitcoin ETFs proved hugely popular among investors in the U.S. and attracted significant investments, redefining what it means to invest in crypto. Since they began trading on the 11th January 2024, the ETFs have amassed net inflows of approximately $38.3 billion. Over the past year, BlackRock’s iShares Bitcoin Trust has led the market, receiving almost $38 billion in net inflows and hitting a record pace to reach $50 billion assets under management (AUM) in just 227 days, and making it one of the most successful ETF launches in history.
Other Bitcoin ETFs, such as Fidelity’s Wise Origin Bitcoin Fund, garnered over $10 billion. However, not all funds came out on top, as Grayscale’s Bitcoin Trust saw outflows exceeding $21 billion, understood to be due to its 1.5% management fee, compared to an average 0.25% (one sixth of Grayscale’s fee) fee for most other ETFs. WisdomTree has seen the lowest investor flows. The strong performance of the majority of these ETFs over the course of 2024, along with other events, has led to surges in Bitcoin’s price, with the cryptocurrency smashing its $100,000 milestone and reaching an all-time high of over $108,000 in December.
What has the approval of spot Bitcoin ETFs meant for the crypto space?
The approval of 2024’s spot Bitcoin ETFs marked a turning point in the crypto industry. They have significantly impacted the general perception of Bitcoin, and by extension, cryptocurrencies, by demonstrating greater acceptance and trust of these assets. The enhanced accessibility to Bitcoin investment has helped foster substantial institutional adoption, by bridging the gap between traditional finance and the crypto space.
What’s more, the approval of these spot Bitcoin ETFs opened the door to more products, such as the Ethereum ETFs, launched on the 23rd July 2024, which have also seen huge inflows. According to Cointelegraph, Ethereum ETFs’ cumulative net inflows surpassed $2.5 billion on the 24th December, five months following the start of trading. However, while Bitcoin’s price has ballooned by over 50% since the ETF launch, ether has only increased by approximately 15%, demonstrating the cumulative impact other events have had throughout the year, including the Bitcoin halving and political support from President Donald Trump.
Growing acceptance drives crypto payments
The increasing acceptance and adoption of Bitcoin by both institutional and retail investors has resulted in a significant surge in external approval for the crypto space in general. This more positive sentiment surrounding Bitcoin and cryptocurrencies has and will continue to have a positive impact on its utility, particularly with regards to crypto payments. Institutional investment especially has helped provide the market with greater liquidity and stability, which are crucial factors for the widespread adoption of crypto payments. This progress is not only great news for consumers looking for more outlets at which to spend their crypto holdings, but also for merchants, who are able to securely tap into new streams of revenue from an ever-larger consumer segment.
For more on crypto trends, or to learn how to integrate crypto payments into your business’ workflow, visit www.forumpay.com, or get in touch with our sales team to discuss any questions you may have.
