A Shift Towards Institutional Adoption
The past year has been a transformative one for bitcoin (BTC-USD) and the broader cryptocurrency market. This shift towards institutional adoption marks a significant milestone in the growth and development of digital assets. Among the most notable milestones were the launch of US-based spot bitcoin exchange-traded funds (ETFs), the introduction of options on these ETFs, and bitcoin’s remarkable surge past the $100,000 (£78,600) mark in December.
A New Era of Institutional Adoption
The launch of spot bitcoin ETFs on 10 January catalyzed an early-year rally, with bitcoin climbing from the upper $30,000s to nearly $48,000. This milestone gave institutional investors access to a regulated spot bitcoin ETF, creating a foundation for new market activities, including trading against regulated futures products and incorporating bitcoin as a portfolio optimization tool.
Spot Bitcoin ETFs: A New Tool for Institutional Investors
Spot bitcoin ETFs function similarly to traditional ETFs but with a distinct focus on tracking the current price of bitcoin. These financial products directly invest in bitcoin as the underlying asset, unlike derivatives-based bitcoin ETFs that use financial instruments like futures contracts to replicate bitcoin’s prices. This distinction allows investors in spot bitcoin ETFs to have direct exposure to the price movements of bitcoin itself.
The Year’s Transformative Events
However, the year was far from linear. After the initial ETF-fueled rally, bitcoin saw a sell-off before surging into a spring rally that propelled the digital asset above $73,000. "Optimism about greater incorporation of bitcoin as a tool and burgeoning liquidity in traditional crypto volatility markets drove this surge," Gordon Grant, cryptocurrency derivatives trader, said.
Record Highs and Regulatory Developments
On 14 March, bitcoin hit a record high of $73,580, according to CoinGecko data. This price bolstered by increased inflows from fund managers such as BlackRock (BLK) and Franklin Templeton (BEN), via spot bitcoin ETFs.
The Summer Slump and Regulatory Uncertainty
The summer brought challenges, including the German government selling seized bitcoin and uncertainty surrounding the US presidential election. "Rumblings of bitcoin sales by the US government and a regulatory overhang caused a summer slump," Grant said.
A New All-Time High and Institutional Interest
Yet, by the end of the year, the election of a crypto-friendly administration in the US reinvigorated the market, pushing bitcoin beyond $100,000 in December. Since then, bitcoin has reached an new all-time high above $108,000.
Institutional Interest in Bitcoin
2024 was transformative for bitcoin and the broader cryptocurrency market. Among the year’s biggest developments was the introduction of options on spot bitcoin ETFs.
Options on Spot Bitcoin ETFs: A New Tool for Institutional Investors
Options are financial derivatives that give investors the right, but not the obligation, to buy or sell an underlying asset — such as shares in a spot Bitcoin ETF — at a predetermined price before a specific expiration date. They are powerful tools for managing risk and speculating on price movements.
"This has broadened the horizon for the asset class," Grant said, highlighting the billions of dollars in daily trading volumes that now eclipse the rest of the crypto options market. These options signify a deeper integration of bitcoin into institutional finance, redefining its trajectory.
A New Phase of Adoption: Prime Services Optimization and Trade Finance
The maturation of capital markets around bitcoin is set to unlock new investment opportunities and use cases. From prime services optimization to trade finance, bitcoin is becoming an increasingly versatile financial instrument.
"The holy grail for institutional players — seamlessly integrating bitcoin with equities, derivatives, and cash products — is now within reach," Grant said. This harmonization could catalyze capital market decisions in the coming year.
Conclusion
As bitcoin begins 2025 with momentum, the groundwork laid in 2024 underscores its transition from a speculative asset to a prospective cornerstone of institutional finance. The launch of spot ETFs, the development of new financial instruments, and its integration into global trade frameworks have redefined bitcoin’s trajectory.
"We’re no longer just witnessing the evolution of an asset; we’re seeing the emergence of an entirely new financial paradigm," Grant said.
Key Names to Watch in 2025
- Nvidia
- Apple
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