Milestone moment: Spot Bitcoin ETF approved, BTC moves toward mainstream adoption
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Milestone moment: Spot Bitcoin ETF approved, BTC moves toward mainstream adoption
The most important step toward mainstream adoption of the crypto asset class.
Navigating Web3 tides with focused insightsBy Mary Liu, BitpushNews
"A decade in the making," on January 10, 2024, U.S. Eastern Time, the U.S. SEC officially approved the listing and trading of spot Bitcoin ETFs—an historic milestone representing the most significant step yet toward mainstream adoption of crypto assets.
Eleven approved spot Bitcoin ETFs come from: Bitwise, Grayscale, Hashdex, BlackRock, Valkyrie, ARK & 21Shares, Invesco, VanEck, WisdomTree, Fidelity, and Franklin Templeton.
Binance CEO Richard Teng posted on X: "Today will go down in cryptocurrency history."
A Decade-Long March
The crypto industry has waited over a decade for this moment. Cameron and Tyler Winklevoss first applied to launch the Winklevoss Bitcoin Trust fund on July 1, 2013, when Bitcoin was priced around $100.
Since then, the U.S. SEC rejected more than 30 similar applications, citing concerns about market manipulation.
Last June, BlackRock, the world’s largest asset management firm, filed for a spot Bitcoin ETF—a pivotal turning point that triggered a wave of institutional participation.
Another key development came in August last year, when Grayscale Investments won a major legal victory against the SEC. Grayscale had sued the SEC in 2022 after being denied permission to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
The judge ruled that since the SEC had already approved exchange-traded products holding Bitcoin futures contracts, its refusal to allow the conversion was "arbitrary and capricious." This forced the SEC to reconsider Grayscale's application, as well as those from other issuers.
As momentum shifted, signs of approval began to emerge. Issuers held ongoing meetings and discussions with the SEC, revising filings. For months, the SEC debated with issuers over whether to adopt a cash-based or in-kind creation model. Ultimately, all parties agreed to follow the SEC’s preferred approach—cash creation. With this critical issue resolved, the process moved forward routinely. Amid strong market demand, the SEC emphasized in its announcement today: "Accelerated approval of 11 spot Bitcoin ETF proposals."
Market Reaction
Following the approval news, Bitcoin briefly fluctuated before rising above $47,000, peaking at $47,500.
According to TradingView data, shares of the Grayscale Bitcoin Trust (GBTC), the largest closed-end Bitcoin fund now approved for conversion into an ETF, surged to $40—the highest level since December 2021.
As attention turns to the potential approval of a spot Ethereum ETF, Ethereum rose 11%, breaking $2,500 for the first time in 20 months.
Historically, the launch of Bitcoin-related products has often triggered significant price increases.
The U.S. launched its first Bitcoin futures contract in 2017, followed by the first Bitcoin futures ETF in 2021. In both cases, BTC prices surged in the year following launch, only to later sharply decline.
Ophelia Snyder, co-founder of crypto investment product issuer 21Shares, told CoinDesk that while the ETFs could begin trading as early as Thursday, their broader impact would unfold over the coming months.
Michael Silberberg, Head of Investor Relations at crypto hedge fund Alt Tab Capital, expects "a bubble effect as capital flows from new institutional buyers into the crypto market."
Bartosz Lipiński, CEO of crypto trading platform Cube.Exchange, noted that Ether outperformed Bitcoin after the news, indicating altcoins may also benefit.
"It's been a while since ETH saw a single-day gain of 10%, so this figure is quite substantial," Lipiński said in a report. "Looking ahead, as supply becomes scarcer and these 11 ETFs start absorbing large amounts of supply, it makes sense that Bitcoin will eventually resume its upward trajectory. As Bitcoin becomes harder to buy, other tokens may fill the gap. ETH, Solana (SOL), Polygon (MATIC), and others could gain momentum."
How Much Capital Will Flow Into Spot Bitcoin ETFs?
In the short term, VanEck research analysts predict spot Bitcoin ETFs could see $1 billion in inflows within the first few days, and approximately $2.4 billion within one quarter.
Samir Kerbage, Chief Investment Officer at Hashdex, said during a webinar earlier this month that he also expects $1–10 billion in inflows during the initial weeks and months. He added that the scale of spot Bitcoin ETFs will grow "exponentially" in the coming years. "People may be overestimating the short-term impact of U.S.-approved Bitcoin ETFs while underestimating the long-term implications," he said.
Matt Hougan, Chief Investment Officer at Bitwise, said during an August webinar that his firm estimates U.S. spot Bitcoin ETFs could attract $55 billion in net inflows over their first five years.
Charles Yu, Research Associate at Galaxy Digital, stated in a report from October that $14.4 billion could flow into spot Bitcoin ETFs in the first year alone, potentially driving Bitcoin’s price up by 74% within 12 months of approval.
Gautam Chhugani, Managing Director of Research at Alliance Bernstein, believes his team estimates such financial products will attract $10 billion or more by the end of 2024, growing to "hundreds of billions" within two years.
Other experts anticipate some volatility in the coming days. While spot Bitcoin ETFs are expected to track underlying Bitcoin prices, these funds are large in scale, and significant new AUM could enter within one or two days of trading.
Stuart Barton, co-founder of Volatility Shares, told Bloomberg: "We might see ETFs struggling to gain exposure in the Bitcoin market. We know the Bitcoin market typically sees daily volumes of $10–20 billion. If $40–50 billion floods into these ETFs on day one, financial advisors may find it extremely difficult to acquire that much Bitcoin."
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