Institutional investors have shown a growing appetite for spot Bitcoin and Ethereum exchange-traded funds (ETFs) this year, with the investment volume reaching new heights, particularly in December.
According to a recent report by CoinShares, investors funneled a record $3.85 billion into digital asset funds last week, highlighting Wall Street’s escalating interest in these financial products. A sizable portion of these inflows, amounting to $3.2 billion, was directed into BlackRock’s iShares ETFs, bolstering its cryptocurrency assets under management to $56.7 billion.
Notably, Ethereum-focused investment products also experienced a surge, attracting $1.2 billion in inflows—the highest on record—in surpassing the initial enthusiasm observed when U.S. regulators first greenlighted spot Ethereum ETFs in July.
The United States has emerged as the predominant marketplace for digital asset investment products, drawing in $3.6 billion in inflows. In comparison, Switzerland, occupying the second spot, attracted $160 million, followed by Germany, Canada, and Australia.
Amid this backdrop, there is speculation regarding the potential approval of ETFs linked to smaller cryptocurrencies, such as XRP or Solana, particularly in light of Donald Trump’s anticipated return to the presidency in January.
Furthermore, data reveals that ETF issuers on Wall Street now collectively hold more Bitcoin than any other entity, including Bitcoin’s enigmatic creator, Satoshi Nakamoto. The aggregate market capitalization of Bitcoin ETFs currently stands at $109 billion, surpassing the holdings of notable entities like MicroStrategy and the trading volumes of leading cryptocurrency exchange Binance.
However, despite this bullish investment trend, analysis from CryptoQuant indicates a sizeable sell-off by long-term Bitcoin holders, who have divested 827,783 BTC in the past 30 days. This sell-off may contribute to Bitcoin’s recent struggles to sustain its momentum above the $100,000 mark, with its price oscillating near $97,000 after a brief peak last week.
The growth trajectory of Bitcoin, leading to a market capitalization surpassing $2 trillion and outvaluing the Australian dollar, is largely attributed to institutional investors’ engagement through ETFs rather than individual retail investors.
The forthcoming tenure of Donald Trump, bolstered by promises favorable to Bitcoin, is also considered a pivotal factor. Trump has appointed David Sacks as a “crypto czar” and selected Paul Atkins to lead the Securities and Exchange Commission (SEC), signaling a potentially more welcoming regulatory environment for cryptocurrencies compared to the tenure of current SEC chair Gary Gensler.
Chris Skinner, an independent financial commentator and curator of The Finanser blog, expressed to Decrypt that the president-elect’s stance has rendered cryptocurrencies more reputable. Skinner anticipates a flourishing ETF market over the next four years, emphasizing the inevitable institutionalization of cryptocurrency as contrary to the original libertarian ethos but a necessary evolution for the sector’s growth.