Bitcoin ETFs are off to a bad start. Will things improve?

The path to approval for the first bitcoin exchange-traded funds (etfs) was long and arduous. Applications appeared before regulators in 2013, when the price of a bitcoin was just shy of $100 and nobody had heard of Sam Bankman-Fried or the phrase “to the Moon”. After a decade of rejection, promoters finally succeeded on January 10th, when the Securities and Exchange Commission (SEC) approved 11 applications for ETFs that track the spot price of bitcoin, which was at the time above $46,000.

The advent of bitcoin ETFs was supposed to be a pivotal moment for the digital asset class. For years, devotees had hoped that such funds would attract strait-laced institutional investors, increase liquidity, and demonstrate the credibility and professionalism of crypto. They had also hoped that their approval might buttress demand for bitcoin, pointing to the precedent of a much older speculative asset. When State Street Global Advisors launched America’s first gold ETF in 2004, the metal fetched less than $500 per ounce, below its price in the early 1980s. Over the years that followed, it soared in value, reaching almost $1,900 per ounce in 2011.