Key Takeaways
- Spot Bitcoin ETFs, which launched in January 2024, have made it much easier for investors to gain exposure to bitcoin.
- The introduction of these ETFs led to billions in investments, pushing bitcoin prices to record highs in 2024.
- The success of Bitcoin ETFs has opened the door for other crypto assets like ether to follow suit with their own ETFs.
- After their first full year of trading, Spot Bitcoin ETFs have had a major impact on the way investors approach cryptocurrency.
Spot Bitcoin ETFs began trading on January 11, 2024, offering a simpler and more accessible way for investors to enter the world of cryptocurrencies. The launch played a significant role in driving the price of bitcoin (BTC) to new all-time highs as investors eagerly funneled billions into these new investment products.
How ETFs Made Bitcoin Investing More Accessible
Before the advent of Spot Bitcoin ETFs, investors needed a cryptocurrency wallet and would buy bitcoin directly from a cryptocurrency exchange.
This required a certain level of technical knowledge and comfort with handling digital assets. However, Spot Bitcoin ETFs have changed this by allowing people to purchase bitcoin through traditional brokerage accounts, just like any other ETF.
This accessibility has appealed to both retail and institutional investors. Even traditional Wall Street firms and hedge funds, who had been cautious about cryptocurrencies in the past, have jumped on the bandwagon.
Spot Bitcoin ETFs have made bitcoin investments as easy as buying stocks, helping to bridge the gap between mainstream finance and the world of digital currencies.
Bitcoin, often referred to as “digital gold,” is quickly gaining popularity as an alternative to gold investments. One of the most successful Spot Bitcoin ETFs is BlackRock’s iShares Bitcoin Trust (IBIT). Since its launch, the ETF has seen net inflows of over $37 billion.
As of January 9, 2025, the fund’s assets had surpassed $52 billion, outpacing iShares’ 20-year-old gold ETF (IAU), which has $33 billion in assets. IBIT is closing in on the largest gold ETF, SPDR Gold Shares (GLD), which holds over $75 billion in assets.
How Bitcoin ETFs Helped Push Prices to New Highs
Spot Bitcoin ETFs work by holding actual bitcoin as their underlying asset. When more money flows into the ETF, the fund has to buy more bitcoin to match the increased demand. This influx of buying pressure has had a direct impact on the price of bitcoin.
On January 10, 2024, when the Securities and Exchange Commission (SEC) approved Bitcoin ETFs, the price of bitcoin was hovering around $46,000.
However, after the launch, the price dipped below $40,000 for a short time before surging. By March 2024, bitcoin reached a new high of over $73,000, driven by increased demand from ETF investors.
A key event that fueled this surge was the bitcoin halving that occurred in March 2024. Bitcoin halving, which happens roughly every four years, reduces the rate at which new bitcoin are created, limiting the supply.
With this supply constraint and the increased demand driven by ETFs, the price of bitcoin was pushed even higher.
Additionally, investor optimism surrounding the election of Donald Trump as president in November 2024 gave the cryptocurrency market another boost.
With expectations of a crypto-friendly administration, investors were hopeful that favorable policies would support the growth of the digital asset space.
As a result, bitcoin saw multiple all-time highs, climbing to $108,000 by mid-December before stabilizing at around $95,000 by the end of the year.
Spot Bitcoin ETFs Paved the Way for More Crypto Products
The success of the Spot Bitcoin ETFs has led to the approval of other crypto-focused financial products, including spot ether ETFs and options trading on Bitcoin ETFs. The positive reception of Bitcoin ETFs has encouraged regulators to consider other cryptocurrencies for similar treatment.
With the incoming Trump administration taking office in January 2025, many expect relaxed regulatory restrictions on crypto, which could pave the way for additional crypto ETFs. There are already proposals for XRP (XRP), Solana (SOL), and other altcoin ETFs currently under review by the SEC.
Moreover, experts from Bloomberg have predicted that in 2025, we could see ETF approvals for cryptocurrencies like Litecoin (LTC) and Hedera (HBAR), especially following the approval of combined bitcoin and ether ETFs.
This shift could fundamentally change how investors interact with the cryptocurrency market, making it more accessible and mainstream than ever before.
In summary, the introduction of Spot Bitcoin ETFs in January 2024 has significantly reshaped the landscape of cryptocurrency investing.
With increased investor interest, new crypto-focused products on the horizon, and bitcoin’s impressive price growth, these ETFs have truly marked the beginning of a new era for digital assets.
