The spot Bitcoin ETFs are here. As of writing this article, we’re about ten months in.
That’s ten months of growth, impact, and new holder onboarding. So, what’s been the impact? How have these Bitcoin ETFs affected the overall market, and what do they mean for the greater crypto industry in general?
That’s what we’ll cover today.
From understanding the post-ETF landscape to unpacking the concept of direct ownership, we’ll walk you through these ETFs and how they might or might not fit into your own crypto strategy.
In less than two decades, Bitcoin (BTC) has gone from a niche-novel technology to the cusp of widespread adoption.
If you told crypto early adopters in the 2010s that there would be an ETF in just over ten years, even the most glass-half-full believers would roll their eyes in disbelief. But here we are. And, on January 10, 2024, spot Bitcoin ETFs were approved for trading by the SEC.
Before we dive into how these ETFs impacted the Bitcoin ecosystem, this major milestone in the budding crypto industry needs a bit of an introduction.
We touched on this topic in another blog on ETFs, but here’s a quick breakdown.
Think of an ETF, or exchange-traded fund, like a basket of investments you can buy as easily as a stock. Instead of purchasing Bitcoin directly, you're buying shares of a fund that holds Bitcoin for you.
There are many different types of ETFs:
As of October 2024, there are around 20 Bitcoin ETFs* (information from blockworks.co). Some popular options include:
These Bitcoin ETFs check a few boxes in terms of impact. For one, it’s a pretty monumental moment of validation for the entire crypto community. The biggest names on Wall Street are now on the crypto-train. For big institutions, ETFs offer a regulated investment option that fits neatly into existing trading systems.
For retail investors, ETFs present a great entry point into Bitcoin investing. There is no need to understand a crypto wallet or manage your own keys; just trade through your familiar brokerage accounts.
Of course, these ETFs aren’t without their downsides, which we’ll get to later.
So, how have the markets reacted to the introduction of spot Bitcoin ETFs?
Well, by many metrics, Bitcoin ETFs have been a massive success. To give you an idea of how successful, let’s compare the Bitcoin ETF to its closest traditional lookalike: gold.
The first gold ETF pulled in $1.2 billion in its debut month* (as mentioned on financemagnates.com). In the case of spot Bitcoin ETFs, BlackRock's IBIT surged past $4 billion while Fidelity's FBTC climbed to nearly $3.5 billion in the first month alone* (also mentioned financemagnates.com).
As of October 2024, Bitcoin ETFs represent around $69 billion in total onchain holdings, or about 5% of the total Bitcoin supply* (data from dune.com).
While there is a lot of debate around who’s buying the BTC ETFs and how they impact the overall ecosystem, the price chart doesn't lie.
After initial approval in January 2024, BTC shot up in price by over 100%*, (data from coinmarketcap.com) hitting a peak of $73,000 in March and creating a new all-time high* (information from coinmarketcap.com). What’s not reflected in this chart is how ETFs changed the perception of Bitcoin.
As we mentioned before, it’s not a novelty anymore; It’s mainstream.
From state pension funds* (learn more at reuters.com) that represent firefighters, police officers, and school teachers to your retired grandparents in Florida, everyone is getting in on the Bitcoin action through these ETFs.
There’s no denying that spot Bitcoin ETFs are a giant leap forward in terms of adoption. But they aren’t without their downsides. Which, for some in the crypto community, are pretty glaring.
To illustrate why, we need to understand how these ETFs work.
ETF issuers first buy Bitcoin, which they hold in a secure wallet through a trusted custodian. Most of these coins are in cold storage, which means they’re stored offline, enhancing security. These companies offer investors shares that correspond to these coins. Each share is priced in a way to reflect the current spot price of Bitcoin.
In short, you don’t own any Bitcoin but rather shares of an ETF that holds Bitcoin for you.
For many people, this is a huge benefit. You don’t have to stress about managing a crypto wallet or keeping track of your private keys. All you need to do is buy through your regular investment account and let them do all the heavy lifting.
What you don’t get is actual Bitcoin access. Moreover, you often need to pay annual management fees and, ultimately, have a lot of trust in the ETF issuer.
Alternatively, some investors might opt for direct Bitcoin ownership. Here are some of the benefits:
Think of it this way: ETFs are like having a chef cook for you, while direct ownership is like cooking yourself. One's easier but costs more; the other takes more work but gives you total control.
If direct ownership sounds more like your style, there are plenty of ways to purchase BTC.
While you could opt for a crypto exchange, to stay true to the decentralized ethos of Bitcoin, you need a way to cut out intermediaries like banks and other financial institutions. That’s where Bitcoin ATMs (BTMs) flex their strength.
These easy-to-use physical machines offer convenient access to direct Bitcoin purchases with cash.
The process is pretty simple:
Of course, there’s a little more to it than that. For more information, be sure to check out our Bitcoin ATM page for the full process breakdown.
Just like that, you’ve got your hands on some BTC. Now, you can do whatever you like with it. You can spend it, send it, or just HODL it — which means holding BTC for the long run.
No matter what happens, you’re in control.
For many in the crypto space, this is the ultimate freedom that Bitcoin offers and something that shouldn’t be sacrificed for the sake of convenience.
Whether you purchase a spot Bitcoin ETF or buy directly from a BTM or exchange, you’re gaining exposure to this booming investment class. There are certainly benefits of these ETFs gaining widespread popularity, both for investors and the crypto ecosystem in general.
However, they do call into question topics of ultimate ownership and decentralized sustainability. Regardless, there’s no denying we're in a new era.
For those interested in direct ownership of their Bitcoin, there’s no better entry point than a BTM. Here at Bitcoin Depot, we operate the largest network of BTMs across the U.S., Canada, and Puerto Rico, with over 8,300 locations (as of October 2024).
That means you’re never too far away from a seamless cash purchase of Bitcoin using cash.
The best part? Your coins go straight to your wallet after purchase — no banks, no intermediaries, just direct Bitcoin ownership.
To get started, find your nearest BTM today.
*The information provided above is for informational purposes only. The inclusion of any particular 3rd party site does not imply an endorsement, sponsorship, or partnership between Bitcoin Depot and the sites listed above. While Bitcoin Depot endeavors to ensure the accuracy and relevance of the information provided, we do not guarantee the reliability of any 3rd party’s information.