U.S. Bitcoin ETFs have had an extraordinary first year that exceeded expectations, marking a historic event with far-reaching impacts on both the Bitcoin market and the traditional financial industry.
After being approved by the U.S. Securities and Exchange Commission (SEC) on January 10, 2024, the U.S. spot Bitcoin ETF began trading the following day.
In less than a year, these funds have contributed 100% of the total $44.2 billion in inflows into cryptocurrency investment products globally by the end of 2024.
U.S. spot Bitcoin ETFs: Expectations vs. Reality
The pace of inflows into U.S. spot Bitcoin ETFs has surged since their launch, leaving industry leaders astonished by this rapid growth.
James Butterfill, Director of Research at CoinShares, shares:
"Our initial estimate was only $14 billion for this year, but the actual results have far exceeded expectations and are much higher than other forecasts."
He also noted that while BlackRock's Bitcoin ETF achieved $61 billion in assets under management (AUM) in less than a year, the company's gold ETF took 20 years to reach $33 billion in AUM.
Matt Mena, Cryptocurrency Research Strategist at 21Shares, stated:
"I am very optimistic about Bitcoin ETFs in the U.S. because the crypto community has been anticipating this event for over a decade. I forecast net inflows to reach $15 billion, but what we are witnessing has truly surpassed all expectations."
Roxanna Islam, Head of Industry Research and Insights at VettaFi, commented:
"We anticipated the successful launch of the Bitcoin ETF, but a year later, its impact is much greater than we imagined."
All-time best performance
Mena points out that one of the key factors leading to the outstanding success of spot Bitcoin ETFs in the U.S. in 2024 is the expectations and long-term demand from institutions looking to access Bitcoin without facing the complexities of self-custody or directly owning cryptocurrency.
He also mentioned that the U.S. Federal Reserve's (Fed) interest rate cuts and promising cryptocurrency policies under President Donald Trump's administration were driving factors.
Matt Hougan, Chief Investment Officer of Bitwise, stated that the increase in the value of Bitcoin, combined with long-term demand, has made spot Bitcoin ETFs in the U.S. the most successful ETF launch ever.
"Bitcoin is the best-performing asset in history," Hougan affirmed.
Additionally, he believes that major events such as Bitcoin's fourth halving in April and concerns about rising public debt in the U.S. also play an important role.
Butterfill from CoinShares believes another factor contributing to the success of ETFs is their launch timing, when Bitcoin prices were at record lows. He also noted that the SEC's approval has alleviated investors' concerns about the possibility of regulators banning Bitcoin entirely.
The future of U.S. spot Bitcoin ETFs
After an extraordinarily successful year in 2024, U.S. spot Bitcoin ETFs are expected to continue to thrive in the coming year, according to industry executives and experts.
Hougan from Bitwise stated:
"ETFs are a long-term story, and the inflows in the second year often surpass the results of the first year in most cases. I expect the inflows in 2025 to exceed those of 2024, especially as the number of investors accessing these products continues to rise."
Islam from VettaFi also shared:
"We believe that the growth momentum will continue into 2025, and the cryptocurrency ETF ecosystem will expand alongside the overall growth of the crypto industry."
Can smaller Bitcoin ETFs compete?
As BlackRock's iShares Bitcoin Trust ETF dominates with an inflow of $37 billion, accounting for 83% of total cryptocurrency ETF inflows from the U.S. in 2024, many may doubt the viability of smaller Bitcoin ETFs.
However, Hougan from Bitwise believes that the scenario of major issuers like BlackRock gradually dominating the market and replacing other Bitcoin ETFs is unlikely.
"If you look at any market segment with multiple ETFs offering similar exposure, you will see assets allocated among those funds. Some larger ETFs, some smaller, but there is no market where one ETF accounts for 100% of the assets. In markets attracting billions of dollars, there are always smaller, successful ETFs."
Butterfill from CoinShares also affirmed that U.S. Bitcoin ETFs will continue to lead the global crypto ETF industry, and no other market can surpass them in the coming years.