Spot Bitcoin ETFs broke records in 2024 — Can they do it again in 2025?

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The approval and launch of the spot Bitcoin ETFs were among the most anticipated financial products of recent years. As 2024 closed, the $129 billion in total net assets held by the ETFs suggests that 2025 will be even more groundbreaking.

Exchange-traded funds are financial products that reflect the value of their underlying assets. Regulated, transparent, and highly liquid, ETFs provide investors with access to assets they might otherwise be unable or unwilling to hold directly. This format is especially appealing for cryptocurrencies, as it offers a regulated, widely accessible, and tax-efficient investment option.

Since 2013, the US Securities and Exchange Commission has consistently rejected all spot Bitcoin ETF applications. Firms such as VanEck, WisdomTree, Bitwise, ARK Invest, 21Shares, and Grayscale faced repeated refusals.

In 2021, the SEC approved futures-based Bitcoin ETFs, with ProShares’ BITO being the first to launch. Initially a success, it reached $1 billion in assets within just two days. However, investors’ interest in BITO declined quickly, with AUM dropping from a peak of $1.4 billion to $500 million within a year.

This plunge corresponded with the broader crypto market crash but also reflected the limitations of such a product. Futures-based ETFs, while allowing their holders to profit from the Bitcoin price movement, lack the efficiency of spot ETFs, which hold actual BTC (BTC). Furthermore, spot ETFs create immediate buying or selling pressure, directly influencing Bitcoin price and liquidity.

Inflows show the spot BTC ETF was a resounding triumph

In the world of ETFs, spot Bitcoin ETFs have quickly become a phenomenon.

From the outset, the nine new ETFs (excluding Grayscale and Hashdex) shattered many industry records. For example, they generated a $2.2 billion trading volume on the first day, with IBIT alone accounting for $1 billion. According to Bloomberg Intelligence, IBIT and FBTC were the only two funds across the ETF universe to attract over $3 billion in inflows in their first 20 days of trading.

It is worth noting that a significant part of these inflows came from Grayscale’s outflows. With its hefty 1.5% fee, Grayscale became uncompetitive compared to the new ETFs, which charged no more than 0.25%. Yet, the growth wasn’t solely driven by Grayscale outflows. New money poured into the Bitcoin ETF market, and cumulative inflows steadily climbed throughout the year.

By the end of 2024, the success of spot Bitcoin ETFs was undeniable. Although the year was strong for ETFs overall—with total flows for the top 20 funds breaking the previous record by 25%—the new Bitcoin ETFs already stood shoulder to shoulder with long-established veterans.

As Bloomberg’s ETF analyst Eric Balchunas noted in his X post, BlackRock’s IBIT ended the year as one of the top three ETFs by year-to-date flows, raking in $37.2 billion. This remarkable performance put IBIT ahead of stalwarts like Vanguard’s Total Stock Market ETF (VTI), Invesco’s Nasdaq-100 Trust (QQQ), and State Street’s S&P 500 Index fund (SPY) — all with decades of track record. Even more impressive, IBIT achieved this without yet celebrating its first anniversary.

Fidelity’s FBTC also made a strong showing, earning an honorary 14th place.

Bitcoin ETFs flipped gold

Bitcoin is often called digital gold for its value-storing potential, and comparing its ETFs to gold ETFs offers a compelling perspective. As it turns out, Bitcoin ETFs not only met expectations — they surpassed them.

By November 2024, BlackRock’s IBIT had amassed $33.2 billion in assets, surpassing the firm’s gold fund, IAU, which stood at $32 billion. Launched in 2005, IAU started the year with a $25 billion head start on IBIT, but the latter caught up in a matter of months.

The trend is not limited to BlackRock. Vetle Lunde, Head of Research at K33, recently shared a graph showing $129.2 billion of Bitcoin ETFs surpassing gold’s $128.9 billion. This number includes all ETFs (spot and futures).

Narrowing the comparison to spot ETFs alone gives $120 billion for Bitcoin versus $125 billion for gold, as noted by Bloomberg’s Eric Balchunas. The fact that a one-year-old product has caught up to something as time-tested as gold is totally breathtaking.

Spot Ether ETF also makes waves

Ether (ETH), the second-largest cryptocurrency by market capitalization, entered the ETF space with the launch of its first dedicated spot ETFs in July 2024. However, their performance was more subdued compared to Bitcoin’s. Starting with $8.8 billion from the converted Grayscale Ethereum Trust, the total AUM grew modestly to $11 billion by year-end, according to TheBlock. This shows that Bitcoin’s “digital gold” narrative remains more attractive than Ether’s “world computer,” and most investors likely need more convincing of Web3’s potential.

Will more crypto ETFs launch in 2025?

The start of 2025 shows that interest in spot Bitcoin ETFs remains strong, even amid a market correction. According to Farside, the ETFs have already attracted $1.1 billion in net inflows year-to-date.

As Bitcoin continues to gain recognition in political and financial circles, this momentum could persist and maybe even expand to other cryptocurrencies. For instance, the possibility of a spot Solana ETF has become a hot topic in the crypto community. So much so that Polymarket users now assign a 74% probability of a SOL ETF being approved in 2025. Ripple’s ETF chances are estimated at 70%. VanEck, 21Shares, and Canary Capital have already filed for such ETFs.

Additionally, some Bitcoin detractors could reconsider their stance in 2025. Vanguard, one of the world’s largest investment management firms, has so far resisted entering the crypto game.

However, the narrative could shift following the departure of its outspoken anti-Bitcoin CEO Tim Buckley and the arrival of former BlackRock executive Salim Ramji last summer.

Should Vanguard, a $9 trillion giant with a vast trading platform, launch a crypto ETF, it could significantly boost the market.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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