The past year has been a transformative one for bitcoin (BTC-USD) and the broader cryptocurrency market, signaling a shift toward institutional adoption. Among the most notable milestones were the January launch of US-based spot bitcoin exchange-traded funds (ETFs), the subsequent introduction of options on these ETFs, and bitcoin’s remarkable surge past the $100,000 (£78,600) mark in December.
A New Era for Institutional Adoption
This crescendo comes as anticipation builds for a potentially crypto-friendly US administration under President-elect Donald Trump, set to be inaugurated early next year. 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.
"The Volumes Were Terrific Coming Out of the Gate"
According to cryptocurrency derivatives trader Gordon Grant, 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 function similarly to traditional ETFs but with a distinct focus on tracking the current price of bitcoin.
A Shift in How Bitcoin is Being Utilized
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," Grant said.
Record Highs and Challenges
On 14 March, bitcoin hit a record high of $73,580, according to CoinGecko data, its price bolstered by increased inflows from fund managers such as BlackRock (BLK) and Franklin Templeton (BEN), via spot bitcoin ETFs. 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"
However, 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. The launch of spot ETFs, the development of new financial instruments, and its integration into global trade frameworks have redefined bitcoin’s trajectory.
The Rise of Options Trading
One of 2024’s biggest developments was the introduction of options on spot bitcoin ETFs. 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.
"This Has Broadened the Horizon for the Asset Class"
According to Grant, this milestone signifies a deeper integration of bitcoin into institutional capital markets, offering new tools for hedging and speculation. In late November, BlackRock introduced options trading for its iShares Bitcoin Trust (IBIT), generating nearly $1.9bn in notional exposure with 354,000 contracts traded.
A Shift in How Bitcoin is Being Utilized
The ability to hold bitcoin in custody accounts, trade derivatives on ETFs, and integrate bitcoin into global trade frameworks heralds a new phase of adoption. The launch of spot ETFs has redefined bitcoin’s trajectory, making it an increasingly versatile financial instrument.
"We’re No Longer Just Witnessing the Evolution of an Asset; We’re Seeing the Emergence of an Entirely New Financial Paradigm"
According to Grant, this harmonisation could catalyse capital market decisions in the coming year. 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 Future of Bitcoin and Institutional Finance
As we look ahead to 2025, Grant believes that bitcoin’s role in institutional finance will continue to evolve. "This year, bitcoin transitioned from what MicroStrategy executive chairman Michael Saylor described as ‘Promethean fire’ — a novelty that mystifies — to a combustible catalyst," he said.
A New Era for Institutional Adoption
The maturation of capital markets around bitcoin is set to unlock new investment opportunities and use cases. From prime services optimisation 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"
According to Grant, this harmonisation could catalyse capital market decisions in the coming year. 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.
Key Names Include Nvidia and Apple
The FTSE 100 best-performing stocks of 2024 include Nvidia and Apple. Download the Yahoo Finance app, available for Apple and Android.
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