Since its launch in early 2024, the US Bitcoin spot ETF has quickly become a hot spot in the financial market and crypto field. With advantages such as simple operation and regulatory protection, this product not only provides ordinary users with a convenient channel to enter the crypto world, but also promotes the mainstreaming of cryptocurrencies. In this issue of TRON Knowledge Bureau, we will take you to understand the market size and impact of Bitcoin spot ETF.
As we all know, ETFs are investment funds traded on stock exchanges. They usually hold a variety of assets, such as stocks, commodities or cryptocurrencies, and are designed to track the performance of a specific index or asset. Bitcoin spot ETFs use Bitcoin as the underlying asset, and their performance is linked to the real-time value of Bitcoin. When users buy Bitcoin spot ETFs, they are equivalent to indirectly holding Bitcoin without having to personally manage, store or purchase actual Bitcoin. In addition to the United States, Hong Kong, China also approved Bitcoin spot ETFs in April 2024. Although certain management fees and commissions need to be paid, this method is still more convenient than directly buying and selling Bitcoin, and is especially suitable for ordinary users to enter the crypto market.
Since the U.S. Securities and Exchange Commission (SEC) approved the listing of the first batch of Bitcoin spot ETFs on January 10, 2024, its market performance has been particularly impressive. According to SoSoValue data, as of December 30, 2024, the total net asset value of U.S. Bitcoin spot ETFs has reached US$106.24 billion, with a cumulative total net inflow of approximately US$35.24 billion, highlighting users high recognition of this emerging product. In addition, within the 51 weeks of its launch, the Bitcoin spot ETF achieved net inflows in 35 weeks, demonstrating the stability and sustainability of market demand.
Among these ETFs, the five with the largest AUM are:
Among them, BlackRocks IBIT leads the market with a management scale of US$52.15 billion, occupying a dominant position. Grayscales GBTC and Fidelitys FBTC follow closely behind. The three together account for 85% of the market share.
In terms of user groups, participants in Bitcoin spot ETFs are also becoming increasingly diversified. According to a report released by Binance Research in late October, as of October 10, 2024, non-institutional holdings accounted for about 80% of the asset management scale of Bitcoin spot ETFs, showing a high level of retail investors interest in this product. At the same time, institutional participation is also increasing significantly. As of the release of the report, more than 1,200 institutions have invested in Bitcoin spot ETFs, an increase of about 30% since the first quarter.
Among them, Goldman Sachs is a typical representative of traditional financial institutions. According to the 13 F documents it submitted, as of the end of the third quarter, the value of Goldman Sachs Bitcoin spot ETF holdings exceeded US$710 million. This further reflects that traditional financial institutions are gradually paying more attention to it, and it has also attracted a wider range of capital inflows.
The continued popularity of Bitcoin spot ETFs has not only attracted more users, but also brought many impacts to the crypto market:
First, it has significantly increased Bitcoin’s market capitalization share. According to CoinMarketCap data, as of December 30, Bitcoin’s market capitalization accounted for approximately 56.7%, a significant increase from 50.3% at the beginning of the year, further consolidating its core position in the crypto market.
Secondly, the spot Bitcoin ETF has effectively promoted the improvement of market efficiency. According to the Binance Research Institute report, after the launch of the spot Bitcoin ETF, the BTC trading volume in the spot and derivatives markets has increased significantly, and the volume of open contracts has also increased significantly. Among them, the spot trading volume of Bitcoin has repeatedly reached historical highs, making 2024 a record year. It can be said that the SECs approval of the Bitcoin spot ETF has laid the foundation for the prosperity of the Bitcoin market this year. And as the trading volume increases, the markets pricing of Bitcoin will become more efficient.
In addition, the participation of liquidity providers optimizes market depth and improves the ability to handle large-scale orders. At present, the total holdings of US Bitcoin spot ETFs are about 1.129 million BTC, accounting for about 5.7% of the current total supply of Bitcoin. The continued decline in Bitcoin volatility also shows that the market is moving towards a more stable and mature direction.
Overall, the launch of Bitcoin spot ETF is not only an important milestone for the crypto industry, but also lays the foundation for its further integration into the traditional financial system. As the crypto market continues to mature and its popularity continues to increase, Bitcoin spot ETF is expected to attract more users and lead cryptocurrencies to a broader development space.
