Spot Bitcoin ETFs, approved in the U.S. earlier this year, are gaining popularity at an unprecedented pace, driven by growing enthusiasm in the cryptocurrency market. From November 6 to 11, these funds attracted $2.6 billion, with $1.37 billion pouring in on November 7 alone—a record for a single day. This surge follows Donald Trump’s election victory, where he pledged to make the U.S. the “global cryptocurrency capital” and establish a strategic Bitcoin reserve. Bitcoin itself has been breaking all-time highs, crossing $93,000 during this period. With their simplicity and accessibility, Bitcoin ETFs are attracting a diverse range of investors. But what makes them so appealing, and which ETFs stand out in this growing market? Here’s an overview.
Why Bitcoin ETFs Are Popular
Bitcoin ETFs offer a more accessible and straightforward investment vehicle compared to traditional cryptocurrency exchanges. Many retail investors are hesitant to navigate the complexities of crypto trading, including taxation uncertainties. Furthermore, most international exchanges restrict U.S. citizens from registering or trading due to regulatory hurdles.
For institutional investors, adapting established business processes to accommodate new, unconventional tools like cryptocurrency exchanges can be challenging. Processes like automated trading interfaces and authorization protocols are often tailored to traditional stock markets. Bitcoin ETFs effectively bring cryptocurrencies into a familiar environment, streamlining their integration.
Record inflows into Bitcoin ETFs are tied to expectations of clear regulatory frameworks, making ETFs more appealing to institutional investors. The approval of spot Bitcoin ETFs like BlackRock’s iShares Bitcoin Trust has been a catalyst, drawing attention from major players. Additionally, Bitcoin’s rally has amplified FOMO (fear of missing out), spurring retail investments.
The primary advantage of Bitcoin ETFs is their accessibility. Investors don’t need a cryptocurrency wallet—they can purchase Bitcoin through their brokerage accounts. ETFs are backed 1:1 by actual Bitcoin, reflecting its performance. However, Bitcoin’s inherent volatility remains a potential downside.
For Russian qualified investors, U.S.-approved ETFs open up opportunities to invest in Bitcoin. Finam, for example, offers access to over 20,000 U.S. stocks and options through its “Segregated Global” accounts, along with a guide to obtaining qualified investor status.
Top Bitcoin ETFs in the Market
The leading funds are managed by major companies like BlackRock, Grayscale, and Fidelity. Their respective ETFs—iShares Bitcoin Trust (IBIT), Grayscale Bitcoin Trust (GBTC), and Fidelity Wise Origin Bitcoin Fund (FBTC)—dominate the market. These funds trade on different exchanges and don’t directly compete, but their marketing strategies set them apart.
BlackRock and Fidelity products currently lead the market, while Valkyrie Bitcoin Fund stands out for its low fees and high liquidity.
BlackRock’s ETF is widely regarded as the most reliable due to its brand and management quality. It has nearly $33 billion in assets under management (AUM). Fidelity’s ETF follows with $14 billion in AUM.
Grayscale’s fund has faced challenges, as it doesn’t fully mirror Bitcoin’s price due to investor sell-offs in favor of more modern ETFs. GBTC, the oldest Bitcoin ETF, leads in net outflows.
Other noteworthy ETFs include:
- Invesco Galaxy Bitcoin ETF (BTCO): With $614 million in AUM, this fund waived its 0.25% fee for the first six months or up to $5 billion in assets, offering an attractive option for short-term traders.
- Bitwise Bitcoin ETF (BITB): Listed on NYSE Arca, this ETF attracted attention with a fee waiver until it reached $1 billion in AUM. Its long-term fee of 0.20% remains competitive.
- ProShares Bitcoin Strategy ETF (BITO): A pioneer among Bitcoin futures ETFs, BITO manages $2 billion in assets. Unlike spot ETFs, it’s linked to Bitcoin futures, deriving value from expected future prices rather than current prices.
- Volatility Shares 2x Bitcoin ETF (BITX): This leveraged ETF targets double the daily price movement of Bitcoin, offering potential for significant gains but at higher risk. BITX recorded a 66% return over six months.
- ProShares Short Bitcoin ETF (BITI): With $73.9 million in AUM, BITI allows investors to bet against Bitcoin, providing inverse exposure to its price.
Future of Bitcoin ETFs and the Cryptocurrency Market
The future of Bitcoin ETFs looks promising, with capital inflows expected to double by 2025. Growing institutional interest and clearer regulatory frameworks will likely attract new players to the market.
Bitcoin’s price is projected to reach $100,000 by 2025, driven by its limited supply and increasing institutional adoption. However, market volatility could trigger short-term corrections at key price levels. Long-term, Bitcoin is expected to solidify its appeal as an investment asset.
Trump’s election has also fueled optimism for the cryptocurrency market, with his promises of regulatory reforms creating expectations for a broader range of crypto ETFs. This could lead to the development of ETFs covering a wider array of crypto assets and thematic portfolios, such as decentralized exchange tokens or popular meme coins.
Bitcoin is expected to trade between $100,000 and $120,000 in early 2025, with the broader crypto market potentially peaking in late summer or early autumn. Historically, bull markets tend to last around 500 days after a halving event.
This article is for informational purposes only and does not constitute individual investment advice or an offer to buy specific securities or assets.