The bitcoin ETF launch about a year ago was one of the most successful product launches in financial history. There is now roughly $113 billion in bitcoin ETFs, a little more than 1% of the assets under management in all exchange traded funds. Consider this: there have been over 6,000 ETF launches in the United States. Looking at the largest ETFs one year after they launched, Bloomberg’s James Seyffart noted that, “Even if you inflation adjust the assets, 4 of the Bitcoin ETFs [ IBIT , FBTC , ARKB , and BITB ] are in the top 20 U.S. ETF launches of all time.” Spot bitcoin ETFs (Assets Under Management) iShares Bitcoin Trust (IBIT) $52.8 billion Fidelity Wise Origin Bitcoin Trust (FBTC) $19.4 b. Grayscale Bitcoin Trust (GBTC) $19.3 b. ARK Invest/21Shares (ARKB) $5.1 b. Bitwise Bitcoin Trust (BITB) $3.9 b. Grayscale Bitcoin MiniTrust (BTC) $3.7 b. ProShares Bitcoin ETF (BITO) $2.4 b. Van Eck Bitcoin ETF (HODL) $1.3 b. Franklin Bitcoin ETF (EZBC) $717 million CoinShares Valkyrie Bitcoin Fund (BRRR $833 m. WisdomTree Bitcoin Fund (BTCW) $366 m. Sources of bitcoin ETF success The bitcoin ETFs have been hugely successful because they combine: 1) strong retail interest in bitcoin with 2) the convenience and safety of the ETF wrapper. That final point — the ETF wrapper — is critical to understanding the success of the product. “The ETF structure remains undefeated in terms of being the best vehicle to provide access to liquid markets,” Mike Akins from ETF Action told CNBC. “If your goal is to ‘invest’ in crypto then why would you bother owning it on an exchange with little track record and/or oversight or worse try to move it off-chain in some sort of hard wallet that you’ll undoubtedly lose at some point?” Akins said. “For a few basis points… you get the peace of mind knowing that some of the largest asset managers in the world are safeguarding your investment.” Selling bitcoin near one-year ETF anniversary The one-year mark is important for more than just a first anniversary, Ric Edelman said in an email to CNBC. “We’ll likely see continued drop in [bitcoin] price for a few weeks,” he said. Edelman is a financial advisor and founder of the Digital Assets Council of Financial Professionals, which aims to provide financial advisors with comprehensive crypto education. “The ETFs are now 1 year old, so the gains begin to cross into the long-term capital gains territory, which many were waiting for in order to take profits and/or engage in rebalancing. That, along with Biden’s decision to have the government sell 69,000 bitcoins (a final slap in the face to the crypto community) will cause selling pressure.” Edelman said that selling pressure will be “somewhat” offset by growing institutional interest: “By year end, far more institutions and [registered investment advisors] will be engaging, and I expect BTC to end the year above $150,000.” Bitcoin ended last week near $95,000. Identifying who’s buying bitcoin ETFs Indeed, growing institutional interest is the heart of the bull case for bitcoin in 2025. Demand from institutions and investment advisors for bitcoin ETFs has so far been very modest, Akins from ETF Action said. “Where this demand is coming from … is so far retail and hedge funds,” Akins said. “Depending on your point of view this could be longer-term bearish or bullish,” Akins said. “Bulls would say that advisors will eventually coalesce, and even small allocations will result in strong upward price pressure. Bears will say that this story is no different than what happened during the pandemic with ARKK ,” when investors poured money into Cathie Wood’s flagship fund and later left when returns fell apart. BTC.CM= mountain 2023-12-31 Bitcoin since shortly before ETFs debuted. New crypto ETF variants coming If 2024 was the year of bitcoin ETFs, a good part of the 2025 ETF story will likely be “Bitcoin PLUS ETFs”, that is, ETFs that combine bitcoin in many different ways. “We will see lots of new products — an array of ETFs with many strategies/offerings,” Edelman said, noting that investors will be offered actively managed bitcoin products, and those using leverage, options and downside protection. “The ETF industry is very good at inventing product, and crypto is so new it is fertile ground,” Edelman said. Indeed, asset manager Calamos recently announced that it will launch a structured protection ETF that aims to give investors a way to capture some of bitcoin’s upside with 100% downside protection. There’s even talk the Trump administration may consider establishing a “Strategic Bitcoin Reserve” in which Bitcoin would be securely stored as a new financial hedge for the U.S. dollar, much like gold is stored. And what about the main driver — the price of bitcoin? Predictions of an imminent downturn in price is being scoffed at by the bitcoin ETF community. “I think the big shock in 2025 is that inflows into bitcoin ETFs will accelerate rather than slowing down,” Matt Hougan from Bitwise Asset Management told CNBC. Hougan manages the Bitwise Bitcoin Trust ETF (BITB), which now has $4.3 billion in assets. Gold precedent “I think a lot of people assume the opposite, but why? In almost every case, ETF inflows accelerate in Year 2 over Year 1 as they are approved on more platforms and gain broader acceptance. That was true with gold ETFs; why would it be any different with bitcoin?” Still, Hougan is unimpressed with the array of confusing new bitcoin offerings he sees coming. “Most investors will be best served by keeping things simple: Own a little crypto, unlevered, in a low cost ETF, and hold it for a very long time. Don’t let shiny new objects distract you from the big picture,” Hougan said. Note: Samara Cohen, chief investment officer of the ETF business at Blackrock, will be our guest on ETF Edge Monday on-air at 12:35 PM and 1:10-1:30 PM ET livestreaming on ETFEdge.CNBC.com. Samara will be joined in the livestream show by Michael Akins from ETF Action.
