Author: Fairy, ChainCatcher
Editor: Nianqing, ChainCatcher
2024 is a historic year for the cryptocurrency market. Over the past decade, the US SEC has rejected at least 30 applications for Bitcoin Spot ETFs, but on January 11, 2024, a historic turning point was reached. The US Bitcoin Spot ETF was officially approved for listing, setting astonishing trading volumes and net inflows. Subsequently, Hong Kong, Australia, and several other countries also launched Bitcoin Spot ETFs one after another, further promoting the legalization process of global crypto assets.
2024 will be the year when crypto assets truly turn into mainstream assets. According to the latest 13-F filings, all types of institutions are currently holders of crypto ETFs, including endowment funds, pension funds, hedge funds, investment advisors, and family offices. In this wave of mainstreaming crypto assets, other digital assets such as Solana and XRP are also gradually coming into the public eye, further setting the stage for developments in 2025.
This article will review the key milestones of crypto spot ETFs in 2024, analyze the market performance of crypto ETFs over the past year, and look ahead to the development prospects of crypto ETFs in 2025.
Key Milestones Review: The Birth Year of Crypto Spot ETFs
Bitcoin Spot ETF 2024 time-traveling back
Back to January 11, 2024, the entire cryptocurrency industry held its breath, and global investors anxiously awaited the final ruling on the US Bitcoin Spot ETF. Finally, the words 'officially approved' appeared before everyone, and the Bitcoin Spot ETF successfully emerged, fulfilling years of anticipation.
On the first day, the trading volume of the Bitcoin Spot ETF exceeded $4.6 billion, with a net inflow of $628 million. In the first three days after its listing, the trading volume approached $10 billion.
On January 19, just a week after trading began, the assets under management of the US Bitcoin ETF surpassed that of the Silver ETF, becoming the second largest ETF commodity category in the US.
With the US approving Bitcoin spot ETFs, Hong Kong is not far behind. On April 15, Hong Kong, in principle, approved BTC and ETH spot ETFs; on April 24, the Hong Kong Bitcoin Spot ETF and Ethereum Spot ETF were officially approved; on April 30, six virtual asset spot ETFs were listed on the Hong Kong Stock Exchange and opened for trading.
The first-day fundraising scale of Hong Kong's spot cryptocurrency ETF was approximately HKD 2 billion, with a net asset value calculated at USD 293 million. The total trading volume of the six ETFs on the first day was approximately HKD 87.58 million (about USD 12.7 million).
The launch of cryptocurrency spot ETFs in Hong Kong has had a profound impact on the financial landscape of the Chinese community and is also an important step towards further legalization of global cryptocurrencies. Hong Kong's crypto ETF adopts a physical creation and redemption mechanism, providing a pathway for crypto assets to be converted into traditional financial assets.
Subsequently, various countries also gradually began to approve and trade Bitcoin Spot ETFs. On June 4, Australia's first Bitcoin Spot ETF officially started trading, and the Thai Securities Commission also approved the local first Bitcoin Spot ETF.
On September 23, the US SEC approved Nasdaq listing of BlackRock's Bitcoin ETF options, and on October 19, the SEC approved trading of various spot Bitcoin ETF options. The scope of Bitcoin-related derivatives has further expanded, bringing to the market compliant options products with trading depth. Bitcoin ETF options allow investors to configure portfolios based on timeframes, especially suitable for long-term investments, injecting more compliance and trading depth into the market.
Ethereum Spot ETF 2024 time-traveling back
In 2024, the Ethereum Spot ETF welcomed a series of important developments globally. From Hong Kong to the US, and to Australia, multiple regions are actively advancing the approval and listing of Ethereum Spot ETFs. Ethereum, as the 'second dragon' of the crypto market, is officially stepping into the view of traditional investors.
On April 24, Hong Kong's Bitcoin Spot ETF and Ethereum Spot ETF were officially approved, marking the first time Ethereum Spot ETF has landed on a major exchange. On its first day, the Hong Kong Ethereum Spot ETF saw a net inflow of 14,200 ETH, with a trading volume of $2.99 million.
On May 24, the US SEC approved the 19b-4 document for the first spot Ethereum ETF. This document is a key step for the legal trading of Ethereum Spot ETFs in the US market, opening the door for Ethereum spot products to officially enter the US market.
On July 23, the crypto market welcomed another historic moment as the US SEC officially approved the Ethereum Spot ETF. The Ethereum Spot ETF's first-day trading volume exceeded $1.019 billion, with a net inflow of $106.6 million.
On November 8, the US SEC again delayed its decision on the listing of spot Ethereum ETF options on the New York Stock Exchange. The document states that the delay aims to conduct further analysis and public opinion, especially regarding whether the proposed rule changes meet the requirements of the Securities Exchange Act.
Other crypto-related ETFs time-traveling back to 2024
After the approval of Bitcoin and Ethereum Spot ETFs, the Solana Spot ETF also experienced a series of important advancements in 2024. On June 20, the first North American Solana Spot ETF application was submitted, marking Solana ETFs' official entry into the public eye. Subsequently, 21Shares and VanEck also submitted applications for Solana ETFs to the SEC.
On August 8, Brazil's Securities Commission approved the world's first Solana Spot ETF, and on August 21, Brazil approved the second Solana ETF. This is a pioneering step for Brazil, bringing more optimism to crypto supporters.
The application for the Solana Spot ETF in the US is ongoing. On November 22, Cboe submitted applications for four Solana Spot ETFs to the SEC, and on December 4, Grayscale sought to convert its Solana trust into a spot ETF and list it on the NYSE. However, shortly after, sources revealed that the SEC had informed at least two Solana Spot ETF application institutions that their submitted 19b-4 documents would be rejected. This news indicates that the US remains cautious about Solana Spot ETFs.
In addition to Solana, XRP is also a key focus for institutions. Currently, Bitwise, 21Shares, and WisdomTree have submitted applications for XRP Spot ETFs in the US.
Moreover, various types of crypto-related ETFs will be launched or enter the application stage in November and December, ranging from single crypto assets to multi-asset portfolios, from index-based to yield-based. This trend marks the gradual move of the crypto market towards mainstream acceptance and proves its further integration with the traditional financial system. Crypto assets are gradually evolving into one of the core assets recognized by global investors.
How did ETF data perform this year?
The total assets under management of ETFs listed in the US exceed $10 trillion, with $40 billion invested in the cryptocurrency sector. Crypto ETFs currently account for 0.4% of the overall ETF market. However, according to K33 Research data, the net inflow of Bitcoin spot ETFs in 2024 will account for 3.5% of all net inflows into US ETFs in 2024, a proportion significantly higher than that of traditional asset classes.
Since its launch, the liquidity speed of Bitcoin ETFs is 4.5 times that of inflation-adjusted gold ETFs. Although the cumulative flow still lags behind gold, the assets under management of US Bitcoin ETFs have surpassed those of gold.
Moreover, the BTC holdings of the US Bitcoin Spot ETF have exceeded 1.13 million coins, surpassing Satoshi Nakamoto's Bitcoin holdings, making it the world's largest 'Bitcoin holder.' These achievements undoubtedly indicate that the Bitcoin Spot ETF is the 'most successful' ETF in history.
As of December 24, the cumulative total net inflow of the US Bitcoin Spot ETF reached $35.49 billion, with a total net asset value of $110 billion. Notably, BlackRock's IBIT net asset value accounts for nearly 50%, reaching $53.7 billion. It is worth noting that the asset scale of IBIT is equivalent to the total of 50 ETFs focused on Europe (regional + single country), which have existed for 20 years.
Bitcoin Spot ETF net inflows and Bitcoin price chart, source: sosovalue
US Ethereum Spot ETFs had previously performed modestly, but since November, their inflows and liquidity have significantly increased.
On November 13, ETF issuer Bitwise announced the acquisition of Ethereum staking service provider Attestant. On November 20, 21Shares announced the addition of staking functions to its Ethereum core ETP product and renamed it 'Ethereum Core Staking ETP' (ETHC). Along with news of Trump's victory, market expectations for the introduction of staking features in the Ethereum Spot ETF became even stronger.
As of December 24, the cumulative total net inflow of US Ethereum Spot ETFs reached $2.51 billion, with a total net asset value of $12.35 billion. On December 5, the net inflow reached $428 million, setting a historical record.
Among US Ethereum Spot ETFs, the highest net asset value is Grayscale's ETHE, reaching $4.91 billion, followed by BlackRock's ETF, with a net asset value of $3.65 billion. Together, they account for 69.3% of the total assets of US Ethereum Spot ETFs.
Ethereum Spot ETF net inflows and Bitcoin price chart, source: sosovalue
Which crypto ETFs will be approved in 2025?
Several Solana ETF applications will face their first review deadline from January 23 to 25, 2025. However, according to FOX Business reporter Eleanor Terrett, the SEC has notified at least two SOL Spot ETF application institutions that their submitted 19b-4 documents will be rejected. Meanwhile, insiders revealed that under the current government administration, the SEC may not approve any new cryptocurrency ETF applications.
Bloomberg senior ETF analyst Eric Balchunas expects issuers to resubmit applications after the new SEC chair, Paul Atkins, takes office. Paul Atkins co-chairs the Digital Chamber's Token Alliance, dedicated to researching and promoting the development of the digital asset industry. His appointment may bring new possibilities for the approval of Solana ETFs.
Bitwise submitted 10 cryptocurrency index ETF applications to the SEC, with the first review deadline on January 18, 2025. This ETF includes various mainstream crypto assets currently on the market, including BTC, XRP, Solana, Cardano, Uniswap, Polkadot, Chainlink, Ethereum, Avalanche, and Bitcoin Cash.
Bitwise Bitcoin and Ethereum ETFs will have their first review deadline on January 30, 2025. This ETF is a proposed spot cryptocurrency index fund composed of BTC and ETH, aimed at 'providing investors with an easy way to balance investments in the two largest crypto assets globally.'
In addition, the following crypto ETFs are also waiting for approval:
XRP ETF
Bitwise XRP ETF
Canary XRP ETF
21Shares Core XRP Trust
Wisdomtree XRP Fund
Litecoin ETF
Canary Litecoin ETF
HBAR ETF
Canary HBAR ETF
In addition to ETFs, the approval for Ethereum spot ETF options will also take place in 2025. Bloomberg ETF analyst James Seyffart stated that the SEC's final decision may come around April 9, 2025. However, the SEC is not the only decision-making body; approval from the OCC and CFTC is also needed.
Looking ahead to 2025
In 2025, more crypto assets may enter the ETF space. Although regulatory challenges still exist, the continued participation of institutional investors and the gradual maturation of the market will provide more momentum for the future development of the cryptocurrency industry. We can foresee that crypto assets will no longer merely be speculative tools but will become an important part of global portfolios, driving the deep integration of traditional finance and digital assets.
The following are predictions from industry institutions and KOLs regarding the development of crypto ETFs in 2025:
Forbes predicts that staking will first be incorporated into Ethereum ETFs in 2025. Other cryptocurrencies (such as Solana) will have ETFs launched soon, and there may be a launch of a weighted crypto index ETF.
Vance Spencer, co-founder of Framework, predicts that the listing plans for other cryptocurrencies' ETFs (besides Bitcoin and Ethereum) will be postponed until 2026.
Research agency Messari predicts: ETF inflows will continue to increase in 2025, especially as Grayscale's GBTC turns to positive net flows, making the launch of spot Solana ETFs in the next year or two seem inevitable.
Coinbase stated: Looking ahead, the industry's focus is on whether issuers will expand the asset scope of ETFs to include more tokens like XRP, SOL, LTC, and HBAR, but we believe that these potential approvals may only benefit a limited group of assets.
ETF issuer VanEck predicts that the new SEC leadership (or possibly the CFTC) will approve multiple new spot cryptocurrency exchange-traded products (ETPs) in the US, including VanEck's Solana product. The Ethereum ETP will expand its functions to include staking, further enhancing its practicality for holders, while both Ethereum and Bitcoin ETPs support physical creation/redemption. Whether the SEC or Congress repeals SEC rule SAB 121 will pave the way for banks and brokers to custody spot cryptocurrencies.
ETF issuer Bitwise predicts that Bitcoin ETF inflows in 2025 will exceed those in 2024. The tens of trillions of dollars in assets managed by the company will begin to flow into Bitcoin ETFs.
