The Great Onboarding: Why ETFs Are Crypto’s Gateway To Wall Street
How the approval of Bitcoin ETFs marked a turning point for institutional adoption - and what it means for the future of digital asset investing.
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The Great Onboarding: Why ETFs Are Crypto’s Gateway to Wall Street
Eighteen months ago – before any spot Bitcoin ETF had been approved – the idea that BlackRock could one day earn more in fees from a Bitcoin ETF than from its S&P 500 fund would have seemed laughable. Wall Street analysts weren’t just skeptical – most dismissed the asset class altogether.
Fast forward to today: the skeptics have gone quiet, and the performance numbers speak for themselves.
By the end of 2024, BlackRock’s iShares Bitcoin Trust (IBIT) alone had attracted more than $37 billion in net inflows – a figure that not only outpaced competitors but shattered expectations across the investment landscape. Even research firms that were historically pro-crypto underestimated just how strong institutional demand would be.
According to Bloomberg, IBIT has now officially generated more in annual fees than BlackRock’s flagship iShares Core S&P 500 ETF (IVV). That’s not just symbolic – it’s structural. Crypto is no longer in a test phase. It’s now embedded in the machinery of modern asset management.
The numbers are striking.
Twelve U.S. spot Bitcoin ETFs – issued by BlackRock, Fidelity, Grayscale, Ark, and others – have generated a combined $49.6 billion in cumulative net inflows and nearly $140 billion in total net assets. These totals exclude leveraged products, thematic equity ETFs, and index-linked hybrids. Among them, IBIT stands out as the undisputed leader.
With an expense ratio of 0.25% and approximately $75 billion in assets under management, IBIT has produced an estimated $187.2 million in annual fees – edging out IVV by roughly $100,000. Since its launch on January 11, 2024, IBIT has reached $71.8 billion in AUM in just 371 trading days. That’s five times faster than the SPDR Gold Shares ETF (GLD), which previously held the speed record, taking 1,691 days to reach the same mark.
This performance underscores a dramatic shift in investor behavior.
For advisors and clients alike, two key metrics matter here:
– Cumulative net inflows represent all new capital committed since these ETFs launched – a direct measure of investor demand.
– Total net assets reflect the current value of those holdings – including price appreciation from Bitcoin itself.
Given Bitcoin’s volatility, we expect the gap between inflows and total assets to widen over time – until the asset stabilizes and establishes a stronger price floor. As of now, U.S. spot ETFs represent 6.3% of Bitcoin’s $2.2 trillion total market cap – a clear sign of growing institutional presence.
Issuers are taking note. Since the approval of spot products, we’ve seen an explosion in ETF development – not only futures-based funds (which predated spot approval) but also leveraged ETFs, inverse strategies, crypto-themed equity baskets, index-linked ETFs, downside protection funds, and closed-end vehicles. In short, the product pipeline has exploded.
And while Bitcoin remains the anchor, the playbook is expanding.
What we’re seeing now is a kind of Cambrian explosion of ETF applications – many built on Bitcoin’s success, but now targeting other digital assets. According to internal tracking, the number of crypto-related ETF applications is approaching 100, with over 70 filed in the U.S. alone.
This wave of product development has added pressure to the SEC’s review pipeline and further confirms that demand is not only growing – it’s institutionalizing.
From an asset allocation standpoint, this moment is turning heads. Many advisors are now reconsidering long-held portfolio assumptions. What was once viewed as bold is quickly becoming baseline.
Our outlook: a 1%–3% Bitcoin allocation will soon become a default position in modern portfolio construction. For younger, risk-tolerant, or crypto-native clients, that baseline may rise to 5%–10%.
Meanwhile, Ric Edelman – founder of Edelman Financial Services, overseeing roughly $300 billion – recently offered a bolder view. He now advocates for a 40% portfolio allocation to the asset class. His rationale is simple: the traditional 60/40 model is no longer sufficient, and investors without crypto exposure are effectively short the category.
A few years ago, this perspective would’ve drawn intense backlash. Today, it’s seen as provocative – not reckless.
That’s how early we still are.
The approval of spot Bitcoin ETFs marks a turning point in financial history – one that parallels the launch of the iPhone in the tech world. Just as the iPhone redefined communication, spot ETFs are redefining crypto access. They’re transforming how investors engage with digital assets – making them more accessible, more transparent, and more compatible with fiduciary practice.
Bitcoin is no longer an outlier. It’s becoming infrastructure.
And for financial advisors, that means the time to assess – or reassess – Bitcoin’s role in client portfolios is now.
Ripple and Circle Take Steps Toward Becoming Federally Regulated Banks
Two of the most prominent firms in crypto - Ripple and Circle - have applied for banking charters with the Office of the Comptroller of the Currency (OCC), signaling a major shift toward regulatory alignment with the U.S. financial system. Circle, the issuer of USDC, is seeking to establish a national trust bank to manage its stablecoin reserves, while Ripple is applying for a national bank charter and a Federal Reserve Master Account to bolster trust in its newly launched RLUSD stablecoin. Both moves come as Congress advances the GENIUS Act, legislation that would formally place large stablecoin issuers under OCC supervision. These applications underscore crypto’s growing push for legitimacy and integration into traditional finance - something RIAs will want to track closely as regulatory clarity begins to reshape the digital asset landscape.
Bakkt’s $1 Billion Plan to Build a Bridge Between Wall Street and Bitcoin
Bakkt, a prominent player in the digital asset space backed by Intercontinental Exchange - the parent company of the New York Stock Exchange - has established itself as a trusted intermediary between traditional finance and crypto markets. Since its founding in 2018, Bakkt has expanded from institutional Bitcoin futures into regulated custody and loyalty solutions, building a foundation grounded in regulatory compliance and institutional-grade infrastructure. Recently, the company announced plans to raise up to $1 billion through equity and debt offerings to support a strategic Bitcoin acquisition program. This move signals Bakkt’s commitment to becoming a leading pure-play crypto infrastructure provider, leveraging its deep legacy market connections and regulatory clarity to support institutional participation in digital assets.
Congress Designates July 14 As “Crypto Week” To Advance Key Legislation
Starting the week of July 14, the U.S. House of Representatives will observe “Crypto Week,” a coordinated legislative effort to advance three major bills that could shape the future of digital assets in the United States. The CLARITY Act seeks to end regulatory ambiguity by clearly dividing oversight of digital assets between the SEC and CFTC, while introducing a dual registration pathway and reinforcing anti-fraud protections. The Senate’s GENIUS Act provides a federal framework for payment stablecoins, defining who can issue them, setting reserve requirements, and ensuring regulatory oversight to encourage mainstream adoption. Meanwhile, the Anti-CBDC Surveillance State Act would prohibit the Federal Reserve from issuing a central bank digital currency to individuals, aiming to safeguard financial privacy and autonomy. Together, these proposals mark a pivotal moment in U.S. crypto policy, signaling increased legislative engagement and a step toward long-term regulatory structure.
You’ve Acquired Bitcoin - Now It's Time to Protect It
Now that you've taken the initial step of purchasing Bitcoin, the next priority is safeguarding your investment. One of the most important decisions you'll make is whether to leave your Bitcoin on an exchange or move it to a secure, self-custodied wallet. While leaving it on a platform may seem convenient, transferring your assets to a reputable hardware or software wallet significantly reduces your exposure to potential hacks or custodial risks. If you're holding on an exchange or any digital platform, make sure to enable two-factor authentication (2FA) in your security settings. This adds an extra layer of protection and typically involves pairing your account with an app like Google Authenticator or Authy, which generates a secondary login code on your phone or desktop.
Beyond platform-level security, it’s critical to take full control of your private keys. If you're managing your own wallet, be sure to record your seed phrase or private keys by hand - never store them digitally or online - and keep that information in a secure, offline location like a fireproof safe. For additional protection, consider creating physical backups and storing them separately. These steps may feel unfamiliar to traditional investors, but they're vital in a world where digital assets like Bitcoin don’t come with a ‘forgot my password’ option. By taking security seriously from the outset, you’re not only protecting your holdings but building the kind of infrastructure that institutional investors will increasingly expect.
Disclaimer: The information provided by The Crypto Advisor is for educational and informational purposes only and does not constitute financial, investment, or legal advice. The Crypto Advisor is not a registered investment advisor, broker-dealer, or financial planner. Nothing in this email should be interpreted as a recommendation to buy, sell, or hold any financial instrument or investment. Always consult with a licensed financial professional before making any investment decisions.