Despite initial hesitance, institutional demand for Bitcoin ETFs has surged past early gold ETFs in under a year.
A new research published by Binance, the world’s largest cryptocurrency exchange by market capitalization, shows that Bitcoin spot exchange-traded funds (ETFs) has outperformed early gold ETFs in terms of institutional interest and adoption of the investment product.
According to the research shared with Coinspeaker, US-listed Bitcoin ETFs have recorded net inflows of 312,500 BTC BTC $94 653 24h volatility: 0.1% Market cap: $1.88 T Vol. 24h: $28.23 B , worth over $18.9 billion. This feat was achieved within just ten months after their approval by the US Securities and Exchange Commission (SEC) in January 2024 unlike gold ETFs which amassed around $1.5 billion in under one year.
Bitcoin ETFs Outshines Early Gold Funds
In terms of adoption, Bitcoin lived up to its name as the flagship crypto asset with more than $1.34 trillion in market value. Despite initial reluctance in the institutional adoption of its ETFs, the product later picked up, surpassing traditional assets like gold.
The Binance research shows that more than 1200 financial institutions are now invested in the funds. In comparison, during the first year of Gold ETFs, the investment products were only able to attract 95 corporate investors.
Non-institutional investors account for 80% of demand for Bitcoin ETFs, while institutional holdings have grown 30% since Q1 2024. Notably, investment advisors saw the largest increase, with holdings growing 44.2% to 71,800 BTC.
Despite the progress, it could still take several years for Bitcoin ETFs to be fully accessible across banks, broker-dealers, and financial advisors.
Currently, Bitcoin spot ETFs account for 26.4% of BTC spot volume on average, peaking at 62.6%. These ETFs are driving key market impacts, including greater Bitcoin dominance, improved efficiency, and reduced volatility.
Though still in the early stages, the liquidity and market validation of Bitcoin ETFs are fostering broader adoption, attracting venture capital, expanding on-chain activity, and promoting market inclusivity.
Bitcoin ETFs See 24 Weeks of Positive Inflows
In terms of performance, Bitcoin ETFs have outpaced other crypto ETFs, including Ethereum-based funds. Since their launch in January, these Bitcoin ETFs have amassed 938,700 BTC, valued at over $63.3 billion. Binance’s research indicates that this represents 5.2% of Bitcoin’s total supply, including other similar products.
The funds, now 40 weeks old, have seen positive inflows in 24 of those weeks. As a result, Bitcoin ETFs are sustaining market demand, removing an average of 1,100 BTC daily from circulation.
The Binance research also highlighted BlackRock’s IBIT and Fidelity’s FBTC as the fastest-growing ETFs in the market, based on investor sentiment. Both products ranked among the top 10 assets under management (AUM) of 2,000 ETF launches this decade.
Additionally, Bitcoin’s correlation with the S&P 500 has significantly increased since early 2024, signaling a growing convergence with traditional finance (TradFi) and reflecting changing investor sentiment towards Bitcoin as both a risk-on asset and a hedge against macroeconomic uncertainty.
The research also touches on real-world assets (RWAs) as the next driver of institutional interest in on-chain activities.
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