The launch of spot bitcoin exchange-traded funds (ETFs) on January 11, 2024, marked a significant turning point in cryptocurrency investments. This shift was not unnoticed, as enthusiastic investors poured billions into these ETFs, driving bitcoin's price to an all-time high.
Before spot bitcoin ETFs, buying bitcoin involved getting a cryptocurrency wallet and purchasing the token from a crypto exchange. However, with bitcoin ETFs, investors can now easily gain exposure to bitcoin through their brokerage accounts, a move that has been massively endorsed by both retail and institutional investors.
Improved accessibility and ease have fueled the popularity of bitcoin ETFs, with bitcoin often likened to digital gold. ETFs like Blackrock's iShares Bitcoin Trust sees a resounding success, with over $37 billion in net inflows and assets exceeding $52 billion as of January 9, surpassing even the iShares' 20-year old gold ETF's $33 billion.
More investment into bitcoin ETFs means higher demand, as the ETFs have to buy more bitcoin as the underlying asset. This increased demand was crucial in propelling bitcoin prices to record highs in 2024.
The bitcoin halving in 2024, coupled with investor optimism following Donald Trump's victory in the November presidential election, further accelerated this upward trend in bitcoin prices. Bitcoin peaked at $108,000 mid-December.
The success of bitcoin ETFs has paved the way for the approval of additional regulated crypto-focused financial products. There's active anticipation for the incoming Trump administration to loosen cryptocurrency regulations paving the path for approval of more crypto ETFs such as XRP and Solana. ETF analysts forecast Litecoin and Hedera may also see ETF approvals in 2025.