Key achievements and expectations for 2025

The year 2024 has been pivotal for digital currency exchange traded funds (ETFs), marking a new chapter in the evolution of digital assets as mainstream investment options. With ETFs offering retail and institutional investors easier access to cryptocurrencies, the market saw significant improvements, including increased liquidity, regulatory clarity, and shifts in investor sentiment. This article examines the performance of crypto ETFs throughout the year, analyzing their impact on market dynamics, adoption trends, and the broader financial ecosystem. As we come to the end of this transformative year, it is imperative to assess whether crypto ETFs have lived up to their potential and what their success – or the challenges they may face have for the future of digital finance.

Bitcoin ETF deal: a turning point in crypto adoption

The US Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs on January 10, 2024. This move followed more than a decade of regulatory hesitancy, beginning with the Winklevoss couple's original application in 2013. Over the years, the SEC has repeatedly rejected applications. for spot Bitcoin ETFs, citing concerns about market maturity and potential manipulation. However, the deal was prompted by a court decision for Grayscale Investments, which opposed the SEC's rejection of its proposal to turn the Grayscale Bitcoin Trust (GBTC) into an ETF.

This decision was important for many reasons. Spot Bitcoin ETFs provide direct exposure to Bitcoin rather than relying on futures contracts, offering investors a simpler and potentially more cost-effective way to invest in the digital currency. These ETFs began trading on January 11, 2024, across various US exchanges and saw immediate traction, with $4 billion in trading volumes reported within the first day.

From Bitcoin to Ethereum: A year of ETF benchmarks

After a special approval for spot Bitcoin ETFs, the SEC further advanced the integration of cryptocurrencies in mainstream finance by approving several spot Ethereum ETFs on July 23, 2024. Like Bitcoin ETFs, the approval of Ethereum reflected a regulatory shift from years of doubt to acceptance. digital assets. Both processes highlighted the importance of court management and institutional advocacy in overcoming the initial struggle. However, while Bitcoin ETFs saw rapid and substantial inflows, Ethereum ETFs are expected to collect about 20-25% of the inflows experienced by Bitcoin ETFs, reflecting Ethereum's unique investment profile and market conditions.

A notable difference lies in the regulatory issues associated with Ethereum's proof-of-stake (PoS) mechanism. While Bitcoin ETFs faced scrutiny mostly about market manipulation risks, Ethereum ETFs are hampered by unresolved questions regarding stake and its possible classification as a security offering. This difference reflects the unique challenges and opportunities each digital currency faces as it gains traction in regulated markets. For now, Ethereum ETFs do not include staking-related features.

Comparative performance between Bitcoin and Ethereum ETF

Since their launch, the Bitcoin and Ethereum spot ETFs in the US have shown mixed performance. The Bitcoin ETFs have seen strong interest from institutional investors, with inflows reaching $47 billion within the first 30 days. This rapid use can be attributed to Bitcoin's long-established status as a major digital asset and the ETF's appeal to traditional investors seeking regulated exposure to the fund. The strong performance of the Bitcoin ETF was also aided by bullish market sentiment, as Bitcoin reached new all-time highs above $73,000 in March.

On the other hand, smaller inflows have experienced the Ethereum ETF. While the Ethereum ETF reached $6.7 billion in assets under management in the first month, there were significant flows, indicating that the demand for Ethereum exposure was not as strong as for Bitcoin. Ethereum's lower initial traction can be attributed to its more complex narrative, including factors such as continuous network upgrades and relatively less selling interest compared to Bitcoin.

The 2024 US elections delivered a boost to the digital currency market, with Donald Trump's victory on November 6 fueling a surge in optimism among digital asset investors. Bitcoin ETF was the immediate beneficiary of this sentiment shift, registering an unprecedented high

$1.36 billion in as of Nov. 7 — the biggest since its January debut. By December 9, the total assets under management (AUM) for Bitcoin ETFs reached a historic $115.26 billion, cementing their place as a cornerstone of institutional crypto adoption.

Ethereum ETFs, although slower to respond, mirrored this trend, albeit on a smaller scale. The market saw a turning point on November 11, as Ethereum prices crossed over

$3,000 and net inflows hit $295.5 million. By December 5, Ethereum ETF achieved the highest one-day inflow of $428.5 million, although this was only 31.5% of Bitcoin's recorded day, reflecting the secondary status of Ethereum in the eyes of large investors. As of December 9, the Ethereum ETF managed $13.16 billion in AUM – just 11.4% of the Bitcoin ETF's holdings.

The different performances confirm a clear hierarchy of choice in the digital asset market, with Bitcoin maintaining its leadership as the “digital gold” of institutional portfolios. Trump's presidency, which is seen as more crypto-friendly than previous administrations, has brought new enthusiasm to the sector. However, Ethereum's growth trajectory suggests it is consolidating its role as a high-growth, convenience-focused option, driven by its founding role in decentralized finance (DeFi) and smart contract ecosystems .

Global Surge: Crypto ETFs and ETPs across continents

In 2024, the digital currency investment landscape expanded significantly with the launch of spot ETFs and exchange traded products (ETPs) in major financial centers, including Hong Kong and Europe. These initiatives gave traditional investors a way to enter the crypto market, reflecting a maturing industry and growing institutional interest.

Hong Kong launched its first cryptocurrency ETF on April 30, with notable applications such as the Bosera HashKey Bitcoin and Ether ETFs and ChinaAMC's Bitcoin and Ether ETF. These results, benchmarked against the CME CF Asia-Pacific Bitcoin and Ether Reference Rates, provide investors with access to spot prices backed by institutional grade infrastructure. By December 11, Hong Kong's Bitcoin ETFs reached $442.82 million in net assets, while Ethereum ETFs hit $60.31 million, showing steady growth despite a cautious start. These ETFs are central to Hong Kong's ambition to become a global crypto hub.

Europe also advanced its crypto ETP market with greater product diversity and supportive regulations. Distributors such as 21Shares, ETC Group, and VanEck expanded their offerings, including Bitcoin and Ethereum ETPs with corporate backing along with 21Shares' recently launched NEAR Protocol Staking ETP, Ondo ETP , Pyth Network ETP, and Render ETP. These innovative ETPs focus on emerging blockchain applications, including DeFi, real-time market data, GPU rendering, and staking techniques. The European Union's Markets in Crypto Assets (MiCA) framework strengthened confidence, ensuring transparency and compliance. In response to liquidity concerns, issuers implemented operational improvements, including streamlined creation and settlement processes.

While the European ETP market has long been established, the launch of the US spot Bitcoin and Ethereum ETF in 2024 confirmed the global appeal of regulated crypto investment vehicles, driving capital inflows across sectors .

Forecast 2025: Opportunities and Threats in a Trump-led era

The Trump administration's return to power in 2025 is poised to reshape the cryptocurrency landscape, bringing new opportunities and threats to the rapidly changing market. Expectations are high for the introduction of innovative investment products, including ETFs for major cryptocurrencies such as Solana (SOL) and Ripple (XRP), which are expected to follow the success of Bitcoin and Ethereum ETFs. In addition, hybrid ETFs combining traditional financial instruments with DeFi assets could emerge, allowing investors to diversify the two realms and potentially attracting significant institutional interest.

Trump's presidency is likely to foster a more crypto-friendly regulatory environment. Anticipated policy moves could reduce compliance requirements, increase market access, and create a pro-innovation framework under the leadership of crypto-positive officials. This could greatly accelerate the integration of blockchain technology into mainstream financial systems. However, the challenge will be in balancing innovation with the need for consumer protection and market stability, which could fuel debates about the scope and structure of the regulations.

Institutional interest in cryptocurrencies is expected to increase in 2025, driven by macroeconomic factors such as inflation hedging and the discovery of new investment opportunities. Financial products linked to the growing DeFi sector and other blockchain-based assets are likely to attract more capital from pension funds, endowments and hedge funds, reinforcing crypto's legitimacy as a critical asset class.

Additionally, the US has the potential to regain its status as a global leader in crypto innovation. Favorable regulatory conditions and incentives for blockchain projects could stop the movement of companies seeking refuge in more permissive jurisdictions. This would position the US as a hub for talent, capital, and technological advances in the digital asset space.

Although the outlook for 2025 is optimistic, stakeholders need to be cautious, taking into account geopolitical factors, policy trends, and market volatility. Success will depend on the ability to adapt to these dynamics while taking advantage of the opportunities that come with this transformative period in crypto history.