The year 2024 has been a pivotal moment in the evolution of digital assets, with bitcoin (BTC) experiencing unprecedented growth and adoption. This surge can be attributed to two primary drivers:
Institutional Adoption through Public Balance Sheets
One of the key factors contributing to this success is the increasing integration of bitcoin into public balance sheets as a treasury asset. Governments, corporations, and institutional investors have begun to recognize the potential benefits of including digital assets in their portfolios.
The Rise of U.S.-Listed Bitcoin ETFs
Another significant factor has been the emergence of U.S.-listed exchange-traded funds (ETFs), which have amassed over 1 million BTC. A report from K33 Research highlights the remarkable growth of these ETFs, surpassing even Gold ETFs in terms of assets under management (AUM).
Assets Under Management: Bitcoin vs. Gold
According to Vetle Lunde, analyst at K33 Research, U.S.-listed bitcoin ETFs have reached an impressive $129.25 billion AUM as of Dec. 17. This marks a significant milestone, edging out Gold ETF AUM at $128.88 billion.
Spot-Based Products: A Closer Look
While the overall AUM figures favor bitcoin, Senior Bloomberg ETF Analyst Eric Balchunas notes that when comparing spot-based products exclusively, Gold remains slightly ahead. U.S. bitcoin spot ETFs hold $120 billion in AUM compared to $125 billion for Gold ETFs.
CME Activity Remains Strong
The Chicago Mercantile Exchange (CME), primarily used by institutions, continues to experience robust activity. Open interest contracts have approached new highs, with a staggering 212,635 BTC in open interest contracts.
Basis Trade Premium: A Growing Concern
According to the report, the basis trade premium has continued to rise, reaching an impressive 16.4% — the highest level since November 2023. This indicates that CME traders anticipate increased momentum as the year comes to a close.
January Contracts and Contango
The report notes that ‘January contracts are trading at sharp premiums relative to December contracts, with the contango widening to 1.5% on Monday — the highest next-month premium recorded since November 2023.’ This trend suggests that CME traders expect increased momentum in the coming months.
December Contract Open Interest
The December contract on CME remains the most valuable, with open interest equivalent to 113,480 BTC. The upcoming December roll is expected to be significant, as several upcoming banking holidays may contribute to a further widening of the January premium.
Net Inflows and Cash and Carry Trade
The momentum has continued for the past month, as U.S.-listed bitcoin ETFs have seen net inflows every day since Nov. 27, totaling $6.5 billion, according to Farside data. It is essential to note that a significant portion of these net inflows are part of the cash and carry trade.
Disclaimer
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Conclusion
The year 2024 has been a transformative period for digital assets, particularly for bitcoin. The increasing institutional adoption through public balance sheets and the success of U.S.-listed bitcoin ETFs have contributed significantly to this growth. As we move forward into 2025, it will be essential to monitor these trends and their implications on the market.
Recommendations
For investors looking to capitalize on this momentum:
- Diversify Your Portfolio: Consider allocating a portion of your portfolio to digital assets, including bitcoin ETFs.
- Monitor Market Trends: Keep a close eye on CME activity, basis trade premium, and net inflows into U.S.-listed bitcoin ETFs.
- Stay Informed: Stay up-to-date with market news and developments through reputable sources.
By following these recommendations and staying informed about the latest market trends, you can make informed investment decisions and navigate the ever-changing landscape of digital assets.