The United States is on the brink of a potential game-changer for the cryptocurrency sector with the approval of spot Bitcoin exchange-traded funds (ETFs), which could overshadow the entire $50 billion ETF market. BitMEX’s research indicates that the current global market for crypto-based products encompasses around 150 items with a total asset under management (AUM) of $50.3 billion.
The list includes both spot and futures funds, primarily tracking the price performance of Bitcoin and Ethereum. The largest fund is Grayscale’s Bitcoin Trust, which is currently transitioning to a spot ETF product. Market commentators speculate that the early approval of spot Bitcoin ETF applications, possibly by January 10, could double the money invested in crypto ETP funds.
Bitwise, a crypto investment fund, predicts that spot Bitcoin ETFs could become the most successful ETF products released to date, potentially capturing about $72 billion in AUM over the next five years and more than doubling the current market. Van Eck, a global fund manager, offers a more conservative estimate, predicting an investment of approximately $2.4 billion in spot Bitcoin products by the first quarter of 2024.
Despite the absence of an approved spot Bitcoin ETF product in the United States, such products are not new globally. Countries including Canada, Australia, and Germany already allow investors to purchase shares in spot Bitcoin ETF funds.
The optimism for spot Bitcoin ETF products reflects a broader trend of institutional investment in crypto investment products. ETFGI, an ETF research company, reported that crypto ETF products listed worldwide have attracted $1.6 billion in net inflows since the beginning of the year, with $1.31 billion added in November alone. This amount is nearly double the $750 million in net inflows to crypto ETP products in 2022.
Among 150 crypto funds, the top 20 ETF products attracted the largest investment volume of $1.3 billion throughout 2023. The ProShares Bitcoin Strategy ETF (BITO), launched during the crypto bull market in October 2021, saw the largest individual inflow of $278.7 million in 2023.