In a rapidly evolving crypto investment landscape, the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States could reshape the industry, potentially eclipsing the current $50.6 billion market for crypto exchange-traded products (ETPs). According to recent data from BitMEX Research, there are currently 163 crypto ETPs globally with a cumulative $50.6 billion in assets under management.
This extensive list encompasses spot and futures funds, predominantly tracking the performance of leading cryptocurrencies like Bitcoin and Ethereum. Notably, Grayscale’s Bitcoin Trust stands out as the largest ETP on the list, with ongoing efforts to transform into a spot ETF product. With the U.S. Securities and Exchange Commission (SEC) potentially approving spot Bitcoin ETFs as early as January 10, market commentators anticipate a transformative impact on the crypto investment landscape.
Bitwise, a crypto investment fund, predicts that spot Bitcoin ETFs could become the most successful ETF product ever launched, capturing an estimated $72 billion in assets under management within the next five years. This optimistic outlook contrasts with a more conservative estimate from global fund manager Van Eck, projecting around $2.4 billion inflow into spot Bitcoin products in the first quarter of 2024.
While spot Bitcoin ETFs are yet to receive approval in the U.S., they are not a novel concept globally. Several countries, including Canada, Australia, and Germany, already permit investors to purchase shares in spot Bitcoin ETFs. The anticipation surrounding spot Bitcoin ETFs aligns with a broader trend of increasing institutional investment in crypto products over recent months.
A December 21 report from ETF research firm ETFGI revealed substantial year-to-date net inflows of $1.6 billion into crypto ETFs listed globally, with a significant portion ($1.31 billion) added in November alone. This surge represents nearly double the $750 million net inflows into crypto ETPs observed in 2022. Within the pool of 163 crypto funds, the top 20 ETFs attracted the lion’s share of investment, with a cumulative $1.3 billion flowing into them throughout 2023.
Leading the pack among individual inflows is the ProShares Bitcoin Strategy ETF (BITO), launched during a crypto bull market in October 2021. BITO witnessed the largest inflow, securing an additional $278.7 million in 2023. As the prospect of spot Bitcoin ETFs looms large, 2024 promises to be a pivotal year in the ongoing evolution of crypto investment vehicles.