Spot Bitcoin ETFs: Winners and Losers in Their First Year of Trading

The first year of trading for spot Bitcoin exchange-traded funds (ETFs) has been a game-changer for cryptocurrency investments, attracting significant interest and capital. Since their launch on January 11, 2024, these financial products have recorded net inflows of $36.2 billion, marking a major milestone for the digital asset space. However, the year also exposed a stark divide between the leading ETFs and their less successful counterparts.

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iShares Bitcoin Trust Leads the Pack

The iShares Bitcoin Trust (IBIT), managed by BlackRock, has emerged as the undisputed leader in the spot Bitcoin ETF market. The fund has set new benchmarks for growth and performance, recording nearly $38 billion in net inflows in its debut year—more than triple that of its closest competitor.

Key Achievements:

• Rapid Growth: IBIT reached $50 billion in assets under management (AUM) in just 227 trading days, breaking the previous record of 1,323 days set by the iShares Core MSCI Emerging Markets ETF (IEMG).

  
  

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• Surpassing Gold ETFs: IBIT overtook BlackRock’s iShares Gold ETF (IAU) and is closing in on the $75 billion AUM held by SPDR Gold Shares (GLD), the world’s largest gold ETF.

IBIT’s success has not only established it as a dominant player but also underscored the growing acceptance of Bitcoin as a mainstream investment option.

Fidelity and Bitwise Also Perform Well

While IBIT led the market, other ETFs also secured substantial inflows:

• Fidelity Wise Origin Bitcoin Fund (FBTC): The second-most successful ETF in 2024, FBTC attracted over $10 billion in net inflows.

• Bitwise Bitcoin ETF (BITB) and ARK 21Shares Bitcoin ETF (ARKB): Both funds achieved inflows in the billions, solidifying their presence among notable contenders.

Challenges for Grayscale Bitcoin Trust

The Grayscale Bitcoin Trust (GBTC), once a major player in Bitcoin investments, faced significant challenges in the new ETF landscape:

• Massive Outflows: GBTC experienced over $21 billion in outflows as investors migrated to more efficient ETF structures.

• Structural Limitations: As a legacy product predating spot Bitcoin ETFs, GBTC struggled to compete on equal footing, despite remaining one of the largest Bitcoin funds.

A portion of GBTC’s assets was spun off into the newly launched Grayscale Bitcoin Mini Trust ETF (BTC), which may help the firm navigate its evolving role in the market.

Smaller ETFs Struggle to Gain Traction

Several other ETFs launched in 2024 failed to make a significant impact, recording inflows below $1 billion. These include:

• Valkyrie Bitcoin ETF (BRRR)

• Franklin Spot Bitcoin Fund (EZBC)

• Invesco Bitcoin ETF (BTCO)
  These funds highlight the highly competitive nature of the Bitcoin ETF market and the challenges of attracting investor attention in a crowded field.

Implications for the Market

The first year of spot Bitcoin ETFs has reshaped cryptocurrency investments by providing greater accessibility and liquidity. Highlights from the year include:

• Increased Trading Volume: Spot Bitcoin ETFs saw trading volumes exceeding $5 billion on multiple days.

• Market Accessibility: These ETFs simplified Bitcoin exposure for both retail and institutional investors, driving adoption.

• Sector Evolution: Legacy funds like GBTC are under pressure to adapt as newer ETFs offer more competitive structures.

As the second year of trading begins, the future of spot Bitcoin ETFs looks promising but competitive. Investors will watch closely to see whether funds like IBIT can maintain their dominance and whether underperforming ETFs can improve their market position.

With Bitcoin adoption continuing to grow, spot Bitcoin ETFs are likely to play an increasingly central role in bridging the gap between traditional finance and digital assets.

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