Spot Bitcoin ETFs Achieve Record Success

Spot bitcoin exchange-traded funds (ETFs) debuted less than a year ago and have already been labeled the most successful ETF launches ever. BlackRock's Bitcoin ETF just passed another significant milestone.

As of Nov. 7, the iShares Bitcoin Trust (ticker IBIT) has net assets of around $33.17 billion, surpassing its peer, the iShares Gold ETF (IAU), which has net assets around $32.9 billion. IBIT began trading in January 2024, while IAU began in January 2005.

> "Absolutely wild," said ETF Store President Nate Geraci in a post on X. This milestone was achieved on the same day IBIT generated $1.1 billion in net inflows, marking a record for single-day inflows.

Jeff Mei, COO of BTSE, commented on the influences driving institutional investment: "Trump's victory, combined with the Fed rate cut on Thursday, spurred institutions to make the plunge into crypto markets. With more rate cuts coming, the prospect of pro-crypto regulations, and ongoing stimulus from China, it makes sense that institutions are flocking to BlackRock's Bitcoin ETF. We expect even more in the coming months."

The 12 spot bitcoin ETFs have collectively generated $25.5 billion in net inflows since their January launch.

> "Continue to rewrite ETF history books. And remember, these still aren’t fully available on most large wirehouse platforms (or at all on Vanguard)," Geraci added on X.

While BlackRock's Bitcoin ETF is the largest among newcomers, its gold counterpart does not share this status. State Street's SPDR funds include some of the market’s largest and oldest ETFs, with the SPDR Gold Shares (GLD) having a total net asset value of $75.5 billion.

What's Next for IBIT?

A recent study from Schwab reveals that investors are increasingly interested in cryptocurrency over the next year, particularly among millennials, who show a heightened interest in various types of ETFs, with crypto at the top of their list.

> “Millennial ETF investors have the strongest appetites for ETFs and are most interested in more personalized investment methods,” Schwab noted. They have a stronger inclination towards direct indexing compared to other generations.

Additionally, the U.S. Securities and Exchange Commission approved BlackRock’s proposal to list and trade options for its spot bitcoin ETF in September. Retail traders often utilize options for speculation, while larger institutions use them for hedging purposes.

Dennis Dick, a market structure analyst, emphasizes, “Counter to common opinion, options actually reduce volatility. As open interest rises, it creates natural buyers and sellers on both sides of the market. This increases liquidity and consequently reduces volatility."