In less than a year, spot Bitcoin ETFs have reached a symbolic milestone by attracting more than $20 billion in net inflows. These new financial products, approved by the SEC in January 2024, quickly won over individual and institutional investors, demonstrating the growing integration of Bitcoin into traditional financial markets.
Bitcoin successfully entered the traditional market thanks to spot ETFs
In January 2024, around ten spot Bitcoin ETFs were approved by the United States Securities and Exchange Commission (SEC), marking the end of several years of conflict between the Commission and Grayscale, which ended in 2023 by the asset manager's victory in court.
The launch of these new financial products was a great success, quickly accumulating several billion dollars in assets under management, and definitively integrating BTC among the heavyweights of traditional financial markets.
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Yesterday, Wednesday October 16, 2024, spot Bitcoin ETFs in the United States have crossed the threshold of $20 billion in net inflows.
Spot Bitcoin ETF volumes since launch
In total, these ETFs generated nearly $440 billion in volume, with a largely positive balance, allowing them to accumulate nearly 945,000 BTC under managementor around $64 billion at the current price of Bitcoin.
These figures reflect a massive adoption of Bitcoin via these ETFs, both by individual investors and by professionals and institutions, thus indirectly integrating a part of Satoshi Nakamoto's creation into their treasuries.
However, ETFs do not allow their holders to benefit from the characteristics specific to Bitcoin. Indeed, BTC is designed to be exchanged in a peer-to-peer manner, without an intermediary, in order to avoid the risks associated with trusted third parties, such as banks or custody and funds transfer companies, such as PayPal.
Although ETFs provide significant liquidity to the BTC market and contribute to the currency's appreciation, their holders are neither censorship-resistant nor truly autonomous. Some members of the Bitcoin community even claim that, just like BTC held on exchange platforms, these ETFs do not represent “real” Bitcoin.
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How are spot Bitcoin ETFs used?
These ETFs allow various organizations to hold BTC indirectly, avoiding the accounting and administrative constraints required to hold Bitcoin directly.
They also offer a solution to the technical challenges of holding BTC, which can be complex for those unfamiliar with non-custodial wallets, or for organizations that need to share access to funds via multisig addresses, requiring specific security and recovery mechanisms.
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Organizations that have adopted spot Bitcoin ETFs include Goldman Sachs and Morgan Stanleythe 5th and 6th largest bank in the United States, as well as the State of Michigan which has decided to integrate 110,000 shares of the ARK 21Shares Bitcoin ETF, the spot Bitcoin ETF managed by Ark Invest and 21Shares, d worth $6.6 million to his superannuation fund.
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Source: SoSoValue
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First attracted by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I just have to share my knowledge and convey the passion I have for Bitcoin. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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