How do spot Bitcoin ETFs impact the price of Bitcoin?
How do spot Bitcoin ETFs impact the price of Bitcoin?
On January 10, 2024, U.S. regulators approved spot ETFs for Bitcoin for the first time, ending over a decade of market anticipation. This landmark event drew significant attention and led to considerable volatility in the price of Bitcoin. Before and after the approval of spot Bitcoin ETFs, the cryptocurrency market experienced significant fluctuations. This article on the WEEX Crypto Wiki reviews the context behind the birth of spot Bitcoin ETFs, the movement of Bitcoin's price before and after the approval, and the short-term and long-term impacts of this event—based on factual data, without offering subjective predictions or investment advice.
What is a spot Bitcoin ETF and why is it important?
A spot Bitcoin ETF (Exchange Traded Fund) is an exchange-traded fund that tracks the spot price of Bitcoin, meaning the fund directly holds Bitcoin as an underlying asset. Investors can purchase shares of this ETF on a stock exchange just like buying stocks, thereby indirectly owning Bitcoin without needing to manage the cryptocurrency themselves. This is considered a bridge bringing Bitcoin into the traditional financial system, helping institutional and individual investors access Bitcoin more easily within a familiar legal framework.
Before 2024, there were no spot Bitcoin ETFs approved in the U.S., despite many applications being filed early on. Regulators (the U.S. Securities and Exchange Commission - SEC) had repeatedly rejected spot Bitcoin ETF proposals for over 10 years, citing concerns about potential market manipulation and a lack of surveillance mechanisms. Instead, the SEC only allowed Bitcoin futures ETFs (based on Bitcoin futures contracts) to launch starting in 2021. The absence of a spot Bitcoin ETF in a major market like the U.S. was seen as a barrier preventing institutional capital from flowing strongly into Bitcoin. Therefore, the cryptocurrency community had high expectations for a spot Bitcoin ETF—a product with the potential to legitimize Bitcoin investment on a broader scale and attract significant new capital.
Before the spot Bitcoin ETF was approved
For many years, numerous companies filed applications to establish spot Bitcoin ETFs, but all were rejected. The turning point occurred in mid-2023, when a series of major financial institutions joined the spot Bitcoin ETF race. Notably, in June 2023, the asset management firm BlackRock (managing trillions of USD in assets) filed an application to establish the iShares Bitcoin Trust—a spot Bitcoin ETF. The move from BlackRock created a powerful effect, raising confidence that the likelihood of approval had increased. Immediately following this news, the price of Bitcoin jumped from the roughly 25,000 USD range at the beginning of June to over 30,000 USD by the end of June 2023, reflecting market optimism.
In the following months, a series of other big names like Fidelity, Invesco, WisdomTree, Valkyrie, and others also filed or updated their spot Bitcoin ETF applications. In August 2023, a positive signal appeared when a U.S. federal appeals court ruled in favor of Grayscale Investments in its lawsuit against the SEC, arguing that the SEC was wrong to reject the proposal to convert the Grayscale Bitcoin Trust into an ETF. This ruling increased expectations that the SEC would have to concede and reconsider its stance. Indeed, by the fall of 2023, the deadlines for decisions on ETF applications were successively extended, indicating that approval was drawing closer.
The Bitcoin market in late 2023 was vibrant with news related to ETFs. On October 16, 2023, a false rumor spread on social media that BlackRock had been approved for an ETF by the SEC, causing the price of Bitcoin to spike in minutes, exceeding the 30,000 USD mark before falling back when the news was debunked. However, that event showed the sensitivity of the market: even just a signal about an ETF was enough to trigger a strong wave of buying. By the end of October 2023, the price of Bitcoin unexpectedly broke through to the 34,000 USD range—the highest level in nearly 18 months—as many investors bet on the possibility that the SEC was about to approve the first batch of ETFs. Entering early January 2024, right before the SEC's decision, Bitcoin climbed to around the 45,000 – 47,000 USD threshold, an increase of about 70% compared to the beginning of the fourth quarter of 2023 and reaching its highest price since the beginning of 2022. Clearly, expectations for a spot Bitcoin ETF contributed significantly to pushing the price of this digital currency up in the months before the official news.
After the spot Bitcoin ETF was approved
On January 10, 2024, the SEC officially approved 11 spot Bitcoin ETFs simultaneously, including products from BlackRock, ARK 21Shares, Fidelity, Invesco, VanEck, WisdomTree, Bitwise, Franklin Templeton, Hashdex, and others. This is considered a historic milestone for the cryptocurrency market and the ETF industry. Just one day later (January 11, 2024), the first spot Bitcoin ETFs began listing and trading on U.S. stock exchanges (NYSE, Nasdaq, CBOE). On the opening day, a total of 11 spot Bitcoin ETFs hit the floor simultaneously—an unprecedented occurrence. Liquidity exploded: in the first trading session alone, the trading volume of spot Bitcoin ETF shares reached approximately 4.6 billion USD, showing that investors were excited to pour money into the new product. The price of Bitcoin on this day fluctuated around the 46,000 – 47,000 USD range, approaching a two-year high.
However, not long after the ETFs launched, the market experienced a short-term correction. The phenomenon of "buy the rumor, sell the news" repeated: many investors took profits after the ETF became a reality, causing the price of Bitcoin to drop by about 15-20% in the last few weeks of January 2024. In fact, after touching the nearly 47,000 USD threshold, Bitcoin corrected down to around the 38,000 USD level by the end of January. Nevertheless, this decline did not last long. Entering February 2024, new capital continued to flow into the market, especially through the newly formed ETFs. The price of Bitcoin quickly recovered and for the first time in over two years surpassed the 50,000 USD mark on February 12, 2024. By early March 2024, Bitcoin continued to climb and broke its all-time price record: surpassing the old peak of ~69,000 USD (set at the end of 2021) to set a new historical high of approximately 73,000 USD. Bitcoin setting a new peak showed the positive impact of the ETF: the legalized investment product attracted a significant amount of capital, pushing the demand for buying Bitcoin higher.
After the peak-setting phase, the market showed signs of cooling down in the medium term. In the spring and summer of 2024, the price of Bitcoin fluctuated within a relatively wide range but no longer increased rapidly. For most of the summer, Bitcoin traded around the 60,000 USD range. By September 2024, there were times when the price corrected to below 55,000 USD as some investors temporarily took profits after the strong increase at the beginning of the year. However, compared to before the ETF, Bitcoin's new price floor was significantly higher, and each correction saw significant buying pressure from investors who believed in the long-term outlook. At the end of 2024, a new wave of growth occurred. In November and early December 2024, Bitcoin surged strongly in response to favorable macroeconomic news and the general excitement of the crypto market. On December 5, 2024, Bitcoin for the first time in history surpassed the 100,000 USD mark, reaching a peak of approximately 103,000 USD before stabilizing around 98,000 – 100,000 USD. This six-figure price milestone marked a new chapter for Bitcoin less than a year after spot ETFs were born. Thus, from the 30,000 – 40,000 USD level before the ETF, Bitcoin grew spectacularly to the record level of 100,000 USD at the end of 2024, partly showing the long-term effect of ETF capital flows.
Capital flows and short-term vs. long-term volatility
The birth of spot Bitcoin ETFs paved the way for large capital flows from institutions to flow into the Bitcoin market. Previously, many financial institutions were hesitant or faced legal barriers when investing directly in cryptocurrency. Now, with an ETF channel that is managed and supervised, they have a more convenient means to allocate assets into Bitcoin. Statistics from the first months after the ETF was approved show that capital flows into these funds increased steadily. For example, in just about one month after the U.S. presidential election at the end of 2024, it is estimated that more than 4 billion USD of capital was poured into Bitcoin ETFs in the United States. For the whole of 2024, the volume of Bitcoin held by institutional investors (through instruments such as ETFs, trusts, publicly traded companies buying Bitcoin, etc.) also skyrocketed. It is estimated that approximately 3% of the total circulating Bitcoin supply was purchased in 2024 by institutional capital—a not insignificant portion of which was through newly launched ETFs. These figures show that spot Bitcoin ETFs have become an important capital-attracting channel, contributing significantly to creating Bitcoin's record price increase.
Regarding price volatility, the impact of spot Bitcoin ETFs is clearly reflected in both the short and long term. In the short term, the market reacts very strongly to information related to ETFs: prices soar when expectations rise and are also ready to correct quickly when official news is released due to profit-taking sentiment. The period around the time of the ETF approval in January 2024 proves that—Bitcoin surged to a peak and then corrected down 20% in just a few weeks. The appearance of new ETF products also led to a sudden increase in trading volume, making short-term price volatility larger than usual. However, in the long term, the inclusion of Bitcoin in mainstream investment channels has created more sustainable demand. After initial fluctuations, the price of Bitcoin established a new, higher floor compared to before. Within one year since the ETF (early 2024 to early 2025), Bitcoin not only recovered after corrections but also continuously reached record highs. The market also recorded the increasingly large participation of institutional and individual investors through ETFs, contributing to stabilizing liquidity. Although Bitcoin remains a highly volatile asset, by the end of 2025, this digital currency maintained a price level significantly higher than the pre-ETF period and had not witnessed extreme drops like previous cycles. This partly shows the consolidation of the market when supported by ETF capital flows and wider acceptance.
Conclusion
The launch of spot Bitcoin ETFs marked an important turning point, helping Bitcoin move closer to traditional investors and attracting a large amount of capital into the market. Reality shows that spot Bitcoin ETFs have a clear impact on the price of Bitcoin: initially creating strong short-term fluctuations, but at the same time paving the way for a long-term upward trend thanks to new capital flows and increased confidence in this digital asset. However, Bitcoin remains a high-risk asset with large fluctuations. The ETF does not change the volatile nature of Bitcoin, but only provides an additional access channel. Therefore, investors need to continue to monitor cautiously. The lesson learned is that events like ETF approvals can bring opportunities and also come with challenges, and investment decisions should be based on careful understanding and consideration rather than chasing market effects.
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