The launch of the Bitcoin ETF in January 2024 was heralded as an unprecedented moment for the market. Many expected these offerings to open the door to institutional capital and send Bitcoin prices to new heights. But now, a year later, has the Bitcoin ETF delivered on its promise?
For a more in-depth look at this topic, watch a recent YouTube video here: Have Bitcoin ETFs Lived Up to Expectations?
a strong start
Since their launch, Bitcoin ETF has accumulated over 1 million BTCEquivalent to approximately $40 billion in assets under management. Even when accounting for outflows from competing products like the Grayscale Bitcoin Trust (GBTC), which saw over 400,000 BTC withdrawn, net inflows remain significant at around 540,000 BTC.
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To put this in perspective, the scale of inflows far exceeds what we saw during the launch of the first gold ETF in 2004. The gold ETF earned $3.45 billion in its first year, a fraction of the Bitcoin ETF’s $37.5 billion inflows over the same period. , This highlights the intense institutional interest in Bitcoin as a financial asset.
Bitcoin’s year of development
Following the launch of the Bitcoin ETF, the initial price swings were massive, with Bitcoin falling nearly 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 nearly 120%, reaching new highs. For comparison, the gold price saw a modest increase of 9% in the first year after the launch of the gold ETF.
After the Gold Fractal
When accounting for Bitcoin’s 24/7 trading schedule, which results in approximately 5.3 times more annual trading hours than gold, a striking similarity emerges. Combining the first year of Bitcoin ETF price behavior with gold’s historical data (adjusted for trading hours), we can see almost identical % returns. If Bitcoin continues to follow the pattern of gold, we could see an additional 83% price increase by mid-2025, potentially taking the Bitcoin price to around $188,000.
institutional strategy
An interesting insight from Bitcoin ETFs has been the relationship between Fund flows and price fluctuationsA simple strategy of buying Bitcoin on days with positive ETF inflows and selling on days with outflows has consistently outperformed the traditional buy-and-hold approach. From January 2024 to date, this strategy has returned 130%, while for a buy-and-hold investor it is ~100%, i.e. an outperformance of about 10%.
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For more on this institutional flow strategy, watch the following video:
Using ETF Data to Outperform Bitcoin [Must Watch]
dynamics of supply and demand
While Bitcoin ETFs have accumulated over 1 million BTC, this represents only a small portion of Bitcoin’s total circulating supply of 19.8 million BTC. Corporations like MicroStrategy Collectively holding hundreds of thousands of BTC has also contributed to institutional adoption. Nevertheless, the majority of Bitcoin remains in the hands of individual investors, ensuring that market dynamics are still driven by decentralized supply and demand.
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conclusion
In one year, the Bitcoin ETF has outperformed expectations. With billions inflows, significant impact on price appreciation, and growing institutional acceptance, 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 optimistic.
The comparison of gold ETFs provides an attractive roadmap for the future of Bitcoin. If gold’s fractal holds true, we could be on the cusp of another big rally. With favorable macroeconomic conditions and growing institutional interest, the future of Bitcoin looks brighter than ever.
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Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your research before making any investment decision.
