After the approval of spot Bitcoin ETFs: Will Bitcoin remain "independent and detached," or will the entire market "ascend to immortality"?
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After the approval of spot Bitcoin ETFs: Will Bitcoin remain "independent and detached," or will the entire market "ascend to immortality"?
It is still premature to assert that "cryptocurrencies have become mainstream assets," but the trend toward Bitcoin and cryptocurrencies becoming a global investment mainstream is clearly inevitable.
Navigating Web3 tides with focused insightsAuthor: Jeffrey Hu, Head of Technology at HashKey Capital
Translation: Paimeng, Foresight News
If spot Bitcoin ETFs generate a halo effect, they could also bring greater credibility to the broader digital asset market.
In January this year, a series of spot Bitcoin ETFs were approved. The U.S. Securities and Exchange Commission’s (SEC) final decisions were widely seen as a watershed moment for the cryptocurrency world—Bitcoin had once again led the way into mainstream finance, proving skeptics wrong.
The arrival of ETFs in mainstream finance allows investors to gain exposure to Bitcoin price movements through their regular investment accounts, reigniting an ongoing debate about the role of cryptocurrencies in the global investment landscape. The key question is whether Bitcoin still stands alone among digital currencies, or if digital assets are broadly moving toward normalization and will soon become a standard asset class?
ETF Approval Sparks Bitcoin Bull Run
Shortly after the SEC approved 11 spot Bitcoin ETFs on January 10, markets quickly reacted to trader sentiment. Despite widespread bullishness across the Bitcoin community, Bitcoin's price dropped 15% when eager investors began selling.
However, short-term negative news and price corrections couldn't dampen overall enthusiasm. In the days and weeks that followed, capital began flowing into ETFs launched by financial giants such as BlackRock, Fidelity Investments, 21Shares, and Bitwise. Within a month of SEC approval, ETF net assets exceeded $3 billion, with an average daily inflow of approximately $125 million. This influx helped push Bitcoin’s total market capitalization past the $1 trillion mark.
BlackRock’s iShares Bitcoin Trust (IBIT) was particularly successful. Based on 2024 inflows, it ranked among the top five ETFs—both crypto and non-crypto—matching established index ETFs from iShares and Vanguard that offer exposure to the S&P 500 or the broader stock market.
Sustained capital inflows drove Bitcoin’s price higher, breaking $50,000 for the first time in over a year. The strong correlation between ETF flows and Bitcoin’s price indicates that spot Bitcoin ETFs are not just a new financial product—they represent a significant shift in how mainstream society views Bitcoin.
Ordinary investors can now access Bitcoin through regulated channels without needing to hold it directly or deal with the complexities associated with custody. Moreover, as liquidity increases and ETFs effectively remove Bitcoin from circulation, supply becomes more constrained—especially as the quadrennial “halving” approaches, which will cut miner rewards by 50%.
Will the Crypto Market Follow Bitcoin into the Mainstream?
What are the long-term implications of this sustained demand? Could it catalyze Bitcoin’s transition from a niche "internet money" into a recognized component of diversified investment portfolios, standing alongside stocks, bonds, and real estate? I believe the answer is very likely yes—even if wealth management firms only recommend allocating 1% or 2% of portfolios to spot Bitcoin ETFs, the impact on the entire market would be significant.
Of course, many challenges remain. Cryptocurrencies, including Bitcoin, are still far more volatile than traditional assets, and unpredictable price swings will continue to deter risk-averse investors. A 15% drop in Bitcoin’s price following positive news like ETF approvals is enough to make cautious investors hesitate before committing large sums to Bitcoin-related assets.
Moreover, while current market enthusiasm around ETFs has boosted confidence, Bitcoin’s performance remains to be seen once the initial excitement fades. Its medium-term trajectory—shaped by perceptions among mainstream investors—may only become clear after the halving. The next Bitcoin halving is scheduled for April, when the blockchain reaches block 840,000.
Equally important is that Bitcoin, with its longest track record and strongest reputation as an inflation-resistant currency, is unique in many ways. If asked to name a cryptocurrency, some consumers might say “the one with the dog.” To them, serious digital assets seem no different than joke coins created for laughs, hardly worthy of serious consideration. Furthermore, the sheer number of digital assets, their technical complexity, and unclear regulatory environments all contribute to public uncertainty.
If the success of spot Bitcoin ETFs creates a halo effect around the underlying asset, it could significantly enhance the credibility of the broader digital asset market. Recently, Ethereum’s price surge following Bitcoin ETF success serves as a prime example. Indeed, expectations for spot Ethereum ETFs are rising, with companies including Franklin Templeton, BlackRock, Fidelity, Ark, 21Shares, Grayscale, VanEck, Invesco, Galaxy, and Hashdex already submitting applications.
A spot Ethereum ETF would be a major milestone in the journey of cryptocurrencies becoming mainstream asset classes.
Ultimately, the launch of spot Bitcoin ETFs marks a turning point—one that enhances Bitcoin’s appeal to a wider investor base and brings renewed attention to the entire cryptocurrency market. As the landscape continues to evolve, investors should closely monitor regulatory developments and market indicators. Since most wealth management firms have yet to even engage with Bitcoin or crypto, it’s too early to definitively conclude whether cryptocurrencies have entered the mainstream. However, the trend is clear: Bitcoin and other digital currencies are increasingly poised to become integral parts of the global investment landscape.
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