U.S. spot bitcoin exchange-traded funds needed less than two years to approach $120 billion in assets, a pace that took gold ETFs well over a decade to match, Bloomberg Intelligence senior ETF analyst Eric Balchunas said.
Key Takeaways:
- Bitcoin ETFs reached $120 billion in assets within two years, a pace that outran gold ETFs.
- Institutions control $100 trillion in assets, and few have added bitcoin exposure yet.
- Spot ETFs offer direct bitcoin exposure without the leverage risk of treasury company stocks.
Balchunas shared the numbers in an interview with CoinShares, the digital asset manager behind the CoinShares Bitcoin ETF (BRRR ). The funds pulled in $38 billion in net new money in their first year. That was more than double the $10 billion to $15 billion his team had projected.
Read more: Why Bitcoin Miners Stopped Tracking Bitcoin’s Price
By the time of the interview, net inflows had grown to about $40 billion, and bitcoin’s price gains had pushed total assets to nearly $120 billion, just shy of gold ETFs at that point. That inflow figure was still the hardest number for any ETF to grow, Balchunas said, since assets can rise on price alone without new money coming in.
Balchunas said at the time that bitcoin ETFs could triple the size of gold ETFs within three to five years, since institutions that manage far more money than the entire crypto market have only begun to allocate toward bitcoin.
Part of the draw is how little friction ETFs add compared with buying bitcoin directly, Balchunas said. Crypto exchanges and self-custody wallets carry steep fees and clunky transfers. An ETF trades through a brokerage account instead. The spread runs about one basis point, with a 20 to 25 basis point annual fee.
The shift toward institutional acceptance traces back to June 2023, when BlackRock, Inc. (BLK) filed for a spot bitcoin ETF, a moment Balchunas called a turning point for the asset class. Fidelity Investments, Invesco (IVZ) and Ark Investment Management filed similar applications soon after. The Securities and Exchange Commission approved the funds in January 2024.
Bitcoin's Scarcity Argument
Global institutions hold roughly $100 trillion in assets, Balchunas said. Even a 1% allocation to bitcoin would represent $1 trillion in new demand. Bitcoin’s fixed supply of 21 million coins means that demand would meet a market that cannot expand to match it.
Bitcoin treasury companies such as Strategy Inc. (MSTR), formerly MicroStrategy, offer a different route into the asset. Balchunas said most investors prefer the direct spot exposure an ETF provides instead. He compared it to how the SPDR Gold Shares (GLD) tracks gold. A treasury company adds leverage and balance sheet risk that an ETF avoids.
Even skeptics of bitcoin as an investment should recognize its role as a check on the dollar, Balchunas said. An alternative now exists, he added, and that alone may push governments to keep currency debasement and money printing in check.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
