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

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.