Spot Bitcoin ETFs turn 1 – Assessing what’s done and what’s next in 2025

• Spot Bitcoin ETFs revolutionized finance, amassing $660 billion in trading volume by 2024
• Ethereum ETFs showed resilience too, closing 2024 with $35 billion in inflows despite challenges

11 January 2025 marked the first anniversary of U.S Spot Bitcoin [BTC] ETFs. This groundbreaking development revolutionized both the cryptocurrency landscape and traditional finance.

Approved by the U.S. Securities and Exchange Commission (SEC) on 10 January 2024, these ETFs quickly became a dominant force, accounting for the entirety of the $44.2 billion in global crypto investment inflows by the end of 2024.

Bitcoin ETFs’ 1-year performance recap

Early market leaders like BlackRock, Fidelity, and Grayscale set the pace. Notably, Grayscale gained an edge due to its seamless conversion of an existing product into an ETF, debuting with a significant $29 billion in assets under management.

Moreover, the debut year of Spot Bitcoin ETFs was marked by staggering trading activity. According to The Block’s Data Dashboard, cumulative volumes surpassed $38 billion in their first month alone. By the six-month mark, trading volumes had surged to approximately $323 billion, eventually exceeding an impressive $660 billion by year-end.

Among these ETFs, BlackRock’s iShares Bitcoin Trust ETF (IBIT) stood out as a record-breaker, amassing $61 billion in assets under management (AUM) within a year. This feat outpaced its Gold ETF, which took two decades to achieve $33 billion in AUM.

Analyst weighs in on IBIT’s success

Remarking on the same, Bloomberg ETF analyst James Seyffart said, 

“IBIT’s growth is unprecedented. It’s the fastest ETF to reach most milestones, faster than any other ETF in any asset class.”

However, the dominance of IBIT extended beyond spot trading. It even made waves in the Options market, as noted by Greg Magadini, Director of Derivatives at Amberdata.

With $37 billion in inflows, IBIT captured a staggering 83% of all U.S. crypto ETF inflows in 2024, solidifying its position as the market leader.

However, this overwhelming success has raised concerns about the viability of smaller Bitcoin ETFs. They now face increasing pressure to differentiate themselves in a market heavily skewed toward IBIT’s popularity.

Talking to a publication, Bitwise Chief Investment Officer Matt Hougan noted, 

“Some are bigger, and some are smaller, and there are often one or two really large ETFs. But there is no market where one ETF gathers 100% of the assets, and in markets that attract tens of billions in assets, there are consistently multiple very successful ETFs.”

Factors responsible for BTC ETF success

The success of Spot Bitcoin ETFs stems from factors like Bitcoin’s price growth, sustained investor demand, April’s fourth halving, and concerns over rising U.S debt, according to Hougan.

In fact, despite $149.4 million in outflows on the last trading day, analysts remain unfazed, shifting focus to a potential Bitcoin supply shock driven by surging demand for these ETFs.

Meanwhile, Ethereum [ETH] ETFs are gaining traction too, closing 2024 with $35 billion in inflows despite $68.5 million in outflows on the last trading day. This resilience is a sign of growing confidence in Ethereum’s long-term potential.

Ergo, analysts predict that if trends persist, 2025 could be pivotal for Ethereum ETFs, positioning them to rival Bitcoin ETFs while reshaping the crypto investment landscape.