As the cryptocurrency landscape evolves, the dynamics of Bitcoin Exchange-Traded Funds (ETFs) in the U.S. and Canada have taken a significant turn. In 2024, Canadian investors are migrating towards more liquid alternatives in the U.S., resulting in the largest outflows from crypto ETFs in Canadian history.
A Changing Landscape
In 2024, the U.S. has firmly established itself as a global leader in Bitcoin spot ETFs, while Canada—pioneering the launch of physically settled Bitcoin ETFs—has faced unprecedented losses. U.S. Bitcoin spot ETFs accounted for 100% of the $44.2 billion in net inflows to cryptocurrency Exchange-Traded Products (ETPs), solidifying the U.S. position as the largest holder of Bitcoin ETFs by Assets Under Management (AUM). In stark contrast, Canada experienced $707 million in net outflows, reflecting a notable shift towards U.S. options.
Why the U.S. Leads in Bitcoin ETFs
The surge in U.S. Bitcoin ETFs can be attributed to the SEC’s landmark decision to approve these products in January 2024. This pivotal moment reinforced the U.S.'s dominance within the global ETF market, which represents over 70% of total global AUM.Matt Hougan, Chief Investment Officer at Bitwise, highlights this dominance:
"The U.S. is by far the largest ETF market. The global ETF market totals around $15 trillion, and the U.S. accounts for $10.5 trillion of that."
James Butterfill, Head of Research at CoinShares, adds:
"U.S. investors have historically been more receptive to risky opportunities, particularly in the tech sector, which explains the dominance of Bitcoin ETFs in terms of AUM."
Canada: From Record Inflows to Historic Outflows
Canada made headlines in 2021 by launching the world’s first Bitcoin spot ETF, raising an impressive $4.2 billion within its first year. However, by 2024, it faced record outflows totaling $707 million—surpassing its previous high of $151 million in 2022.Matt Mena, strategist at 21Shares, explains that investors are shifting toward U.S. ETFs due to their superior liquidity and institutional support:
"Canadian ETFs benefited from a regulatory gap in the U.S. Once Bitcoin spot ETFs were approved in the U.S., investors quickly moved their funds."
Outlook for the Global Market
While U.S. Bitcoin ETFs dominate with substantial inflows, it remains unlikely that any other market will match their AUM levels. However, Butterfill notes that European issuers are offering a more diversified range of products, including crypto ETFs with staking yields. Stay connected with the StartUpX ecosystem for comprehensive analysis and updates on cryptocurrency and blockchain markets across the U.S., Europe, and Latin America. Join us on X, Telegram, Facebook, Instagram, and YouTube for exclusive content featuring experts and real-time news.