The past year has been transformative for bitcoin (BTC-USD) and the broader cryptocurrency market, signalling 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.
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.
Yahoo Finance UK spoke to cryptocurrency derivatives trader Gordon Grant to delve into the highs, lows, and transformative events of 2024 — and what they might mean for bitcoin’s trajectory in 2025.
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The launch of spot bitcoin ETFs on 10 January catalysed 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,” Grant said. 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 optimisation tool.
Spot bitcoin ETFs function similarly to traditional ETFs but with a distinct focus on tracking the current price of bitcoin. These financial products directly invest in bitcoin as the underlying asset, unlike derivatives-based bitcoin ETFs, that use financial instruments like futures contracts to replicate bitcoin's prices. This distinction allows investors in spot bitcoin ETFs to have direct exposure to the price movements of bitcoin itself.
However, the year was far from linear. After the initial ETF-fuelled 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.
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,” Grant said.
Yet, 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. ·UCG via Getty Images
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. They are powerful tools for managing risk and speculating on price movements.
“This has broadened the horizon for the asset class,” Grant said, highlighting the billions of dollars in daily trading volumes that now eclipse the rest of the crypto options market. These options signify 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) (IBIT), generating nearly $1.9bn in notional exposure with 354,000 contracts traded. This record-breaking volume marked a significant milestone in the cryptocurrency and ETF markets.
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Grant also pointed to a shift in how bitcoin is being utilised. Beyond being held as a store of value, bitcoin is enabling new forms of financial activity.
Convertible bond issuances by digital asset companies, including miners like Marathon (MARA), have become a key trend. “Miners, typically sellers of bitcoin, are now borrowing from financial markets to buy more bitcoin themselves,” Grant said, describing this as a “rewriting of the script.”
Moreover, bitcoin’s role in global trade is expanding. Discussions within multilateral groups like BRICS have speculated on bitcoin’s potential role in a global financial framework.
The road ahead for the bitcoin
2024 saw a shift in how bitcoin is being utilised, according to experts. ·Chris McGrath via Getty Images
Looking towards 2025, Grant believes 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.
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 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 holy grail for institutional players — seamlessly integrating bitcoin with equities, derivatives, and cash products — is now within reach,” Grant said. 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, Grant added. The launch of spot ETFs, the development of new financial instruments, and its integration into global trade frameworks have redefined bitcoin’s trajectory.
“We’re no longer just witnessing the evolution of an asset; we’re seeing the emergence of an entirely new financial paradigm," he said.
