Bitcoin and the Growing Power of ETFs: A New Approach Begins

In the world of cryptocurrencies, an exciting trend is emerging. Bitcoin recently surpassed the $107,000 mark, reaching a new all-time high driven by the prospect of an imminent interest rate cut by the Federal Reserve. This week is of particular importance, as there is almost certainty about a 25 basis points rate cut. Such a decision could further fuel Bitcoin's surge, as cryptocurrencies often react to financial market signals similarly to technology stocks. Lower interest rates typically lead to increased money supply and a weak dollar, both of which have positive correlations with Bitcoin. Since the U.S. presidential election, Bitcoin has risen by 52% and achieved a staggering appreciation of 149% for 2024. The expectation is that the Trump administration will introduce a favorable regulatory policy for cryptocurrencies, considered a driving factor in cryptocurrency circles. A significant volume driver this year has been the U.S. Bitcoin ETFs, which were launched in January 2024 and now collectively have a market value exceeding $100 billion. Todd Ruoff from Autonomy recently highlighted on CNBC that the institutional acceptance of Bitcoin last year was remarkable. This was further fueled by the Bitcoin halving, which exceeded expectations. The development is often compared to gold and is expected to increase even more in 2025. The collective Bitcoin holdings of U.S. ETF issuers now surpass the alleged holdings of Satoshi Nakamoto. According to CNBC, the 12 existing spot Bitcoin ETFs have had one of the most successful ETF launches with combined managed assets of $100 billion. These funds now hold just over 1.1 million Bitcoin, which accounts for almost 5% of all existing Bitcoin – a number that likely exceeds the holdings attributed to the legendary pseudonymous founder Nakamoto, who is credited with about 1.1 million Bitcoin.