Spot bitcoin ETFs have only been trading for exactly two months, and they’ve already made a massive impact on the cryptocurrency industry.

Whether it’s the amount of inflows, the number of bitcoin acquired or the high levels of trading volume, they have beaten predictions in every metric. At the same time, they have buoyed a bullish bitcoin-led market and revitalized the crypto industry. In fact, these days, it’s hard to tell who’s more bullish on bitcoin, MicroStrategy's Michael Saylor or BlackRock's Larry Fink.

“The U.S. spot Bitcoin BTC +1.04% ETFs have been widely successful well beyond even the most optimistic expectations,” said GSR Research Analyst Brian Rudick to The Block. “Their $10 billion-plus of inflows in just two months is approaching what most thought they would do in the first year, and there are arguments for why inflows may increase from here, like greater issuer sales efforts, their addition to wealth manager product offerings, and normalizing GBTC outflows.”

“They have been nearly the sole driver pushing BTC's price from ~$25k to $70k, have been the most successful ETF launch in history by many measures, and perhaps most importantly, have legitimized and cemented digital assets as an asset class,” he added.

Bloomberg Senior ETF Analyst Eric Balchunas shared a similar view. “First two months officially in the books (it's felt like six) and the ten bitcoin ETFs now have over $55 billion in assets with exactly double that in volume at $110 billion. If these were the numbers at the end of year I'd call them a success,” he posted on X. “To do it in eight weeks is simply absurd.”

Balchunas added that BlackRock and Fidelity’s ETFs rank third and fourth, respectively, in year-to-date flows among all ETFs in mid-March, sitting alongside some of the biggest ETFs in the world. He noted that this was not something he would have predicted.

Calling the spot bitcoin ETF launches of January "a monumental success," Nate Geraci, president of investment advisor The ETF Store, said, "These products have functioned flawlessly, trading with tight spreads and closely tracking the spot price of bitcoin. Add-in rock-bottom fees on the nine new ETFs and it’s been a clear win for investors."  

Capturing 800,000 bitcoin

The ETFs have certainly hit some milestones. They’ve pulled in an additional 180,000 bitcoin on top of the bitcoin that Grayscale’s Bitcoin Trust held when it was converted to an ETF. In combination with the price rise, this has seen the value held in ETFs nearly double from $28.9 billion on the first day to $56.6 billion just two months later.

Spot bitcoin ETFs now hold a total of 802,000 bitcoin. These holdings represent 4% of the circulating supply of bitcoin and are likely higher if you exclude lost or inaccessible coins.  

Scott Johnsson, general partner at Van Buren Capital, said his base case scenario for the bitcoin ETFs was to compare against the launch of the first gold ETF in 2004. He expected modest flows in the range of $50 million per day.

“I think we're now at a point where we can say pretty definitively that my expectations were blown out of the water. Relative to GLD, daily net inflows on a relative (% of AUM or % of total inflows to date) and absolute basis has been extraordinarily strong,” he said. 

Johnsson added that he still views the emergence of the bitcoin ETF category as similar to the adoption of a GLD-like product but on a much faster timeline. “Whereas it took GLD about a decade to saturate, spot BTC ETFs might do the same in far less time. Not to say there won't be dips/outflows along the way, but it's really incredible what we've seen thus far,” he said.

Bitcoin overtaking silver

While the demand for bitcoin from the ETFs has pushed up bitcoin’s price, this was aided by additional demand from Saylor’s MicroStrategy. It recently purchased 12,000 more bitcoin for roughly $821.7 million in cash, increasing its total bitcoin holdings to 205,000. At the same time, bitcoin’s market cap has overtaken that of silver.

The ETFs have also captured 90% of the market share between them and futures-based bitcoin ETFs, with BlackRock, Grayscale and Fidelity making up the lion’s share of the cumulative $100 billion of trading volume. BlackRock has seen a record inflow of $788 million in a single day, with Fidelity’s highest day at $473 million of inflows. 

“With these record flows, Bitcoin buyers are recognizing the cost and security advantages of the ETF wrapper for certain use-cases,” said Matthew Sigel, head of digital assets research at VanEck, which is one of the ETF providers. “BTC's market structure appears permanently altered with the 3-4pm NY close now the most liquid part of the day.”

Sigel explained that the high volumes come during this time period because the benchmarks that market makers and ETF sponsors use to settle are priced in that hour.

Expanding to more wealth management platforms

What also stands out about the success of the ETFs is that they’re still not available on every platform, unlike many more traditional ETFs. For instance, Vanguard is still turning its nose up at the products and said it has no plans to change its mind. But other platforms are not against the ETFs in principle; they just haven’t listed them yet.

"In the next month, we could see the larger wealth management platforms onboard the ETFs, opening up another sluice gate of capital,” said Sui Chung, CEO of CF Benchmarks, a Kraken company and FCA-authorized indices provider used by several of the spot bitcoin ETFs.

“That some of these ETFs regularly see billion dollars in average trading volumes and have AuMs in excess of $10bn means they might also be sufficiently large and liquid to be considered by pension funds,” Sui added. “Of course, that will be at the discretion and investment philosophy of the investment teams and trustees but most of these funds already own commodities so it’s not inconceivable that they might use bitcoin to further diversify returns for plan holders."