The year began notably for the cryptocurrency sector when bitcoin exchange-traded funds (ETFs) were launched in mid-January, quickly drawing around $2 billion in the first three days of trading.
The approval of 11 spot bitcoin ETFs by the US Securities and Exchange Commission (SEC) came after a long wait. While this decision surprised some, many long-term digital asset investors viewed it as a long-anticipated milestone.
Since its inception in 2009, Bitcoin has been seen as highly risky and volatile. Advocates for cryptocurrencies had been hoping for regulatory advancements like this for some time.
A significant development occurred in August 2023 when Grayscale, the world’s largest digital currency asset manager, won a pivotal court case against the SEC regarding bitcoin ETFs. This legal victory was a turning point that influenced subsequent regulatory decisions.
Earlier, in the months leading up to this, major financial institutions such as BlackRock had filed for spot bitcoin ETFs, setting a precedent for other large firms like Invesco, Fidelity, and Franklin Templeton to follow.
After the introduction of several ETFs, BlackRock and Fidelity saw substantial early success, with each attracting over $1 billion in inflows within days. Other firms are approaching the market more cautiously but are optimistic about the future. For example, Patrick O’Connor from Franklin Templeton expressed enthusiasm about expanding into digital-asset ETFs.
In the first week of trading, bitcoin ETFs quickly became the second-largest commodity ETF in the US by assets under management (AUM), surpassing silver.
Looking ahead, some pioneers like Grayscale and BlackRock are now focusing on obtaining approval for spot Ether ETFs, with expectations for such approvals by the end of May. Meanwhile, the excitement surrounding bitcoin ETFs is also spreading globally, with potential launches in Hong Kong expected by March, and interest from South Korea and Indonesia.
