Have Bitcoin ETFs Lived Up to the Hype?

The launch of Bitcoin ETFs in January 2024 was heralded as a game-changing moment for the market. Many expected these products to open the floodgates to institutional capital and catapult Bitcoin prices to new heights. But now, a year later, have Bitcoin ETFs lived up to their promise?

For a more in-depth look at this topic, check out a recent YouTube video here: Have Bitcoin ETFs Lived Up to Expectations?

A strong start

Since their launch, Bitcoin ETFs have accumulated over 1 million BTC, equivalent to approximately $40 billion in assets under management. Even accounting for outflows from competing products such as the Grayscale Bitcoin Trust (GBTC), which has seen withdrawals of over 400,000 BTC, net inflows remain significant at around 540,000 BTC.

Figure 1: ETFs have accumulated over 1 million BTC.

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To put this in perspective, the scale of inflows far exceeds what we witnessed during the launch of the first gold ETFs in 2004. Gold ETFs raised $3.45 billion in their first year, a fraction of the $37.5 billion in Bitcoin ETF inflows over the same period. . This highlights the intense institutional interest in Bitcoin as a financial asset.

Figure 2: The first gold ETF accrued less than 1/10 the value of BTC ETFs in its first year.

The year of Bitcoin’s growth

After the launch of Bitcoin ETFs, initial price movements were disappointing, with Bitcoin quickly falling by almost 20% in a “buy the rumor, sell the news” scenario. However, this bearish trend quickly reversed. Over the past year, Bitcoin prices have increased by around 120%, reaching new highs. For comparison, the first year following the launch of gold ETFs saw a modest 9% increase in the price of gold.

Figure 3: Returns above 100% in the year following approval.

Following the gold fractal

When you take into account Bitcoin’s 24/7 trading schedule, which translates into approximately 5.3 times more trading hours annually than gold, a striking similarity emerges. By overlaying the first year of Bitcoin ETF price action with historical gold data (adjusted for trading hours), we can see almost the same percentage return. If Bitcoin continues to follow gold’s pattern, we could see a further 83% price increase by mid-2025, potentially pushing the price of Bitcoin to around $188,000.

Figure 4: Time-adjusted returns of BTC versus GLD are incredibly similar since ETF approval.

Institutional strategy

An interesting insight from Bitcoin ETFs has been the relationship between fund inflows and price movements. A simple strategy of buying Bitcoin on days with positive ETF inflows and selling on days with outflows has consistently outperformed a traditional buy-and-hold approach. From January 2024 to today, this strategy has returned 130%, compared to about 100% for a buy-and-hold investor, an outperformance of nearly 10%.

Figure 5: The following institutional inflows outperformed BTC buy & hold.

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To learn more about this institutional inflow strategy, watch the following video:
Using ETF Data to Outperform Bitcoin [Must Watch]

Supply and demand dynamics

While Bitcoin ETFs have accumulated over 1 million BTC, this represents only a small fraction of Bitcoin’s total circulating supply of 19.8 million BTC. Companies like MicroStrategy have also contributed to institutional adoption, collectively holding hundreds of thousands of BTC. However, the majority of Bitcoin remains in the hands of individual investors, ensuring that market dynamics are still driven by decentralized supply and demand.

Figure 6: Corporations have also accumulated hundreds of thousands of BTC but are still minority holders.

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Conclusion

One year later, Bitcoin ETFs have exceeded expectations. With billion-dollar inflows, a significant impact on price appreciation, and growing institutional adoption, they have solidified their role as a key driver of Bitcoin’s market narrative. While some early skeptics were disappointed by the lack of immediate explosive price action, the long-term outlook remains highly bullish.

Comparisons with gold ETFs provide a compelling roadmap for Bitcoin’s future. If the gold fractal is true, we could be on the verge of another major rally. Coupled with favorable macroeconomic conditions and growing institutional interest, Bitcoin’s future looks brighter than ever.

Explore real-time data, charts, indicators and in-depth research to stay ahead of Bitcoin price action at Bitcoin Magazine Pro.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your research before making any investment decisions.

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