The corporate adoption and trust within the cryptocurrency industry are still in the early stages, even after the initial approval of the first spot Bitcoin exchange-traded funds (ETFs).
The regulatory green light given to the first spot Bitcoin ETFs in the United States marked a significant milestone in establishing the legitimacy of the crypto sector, paving the way for the introduction of the first publicly traded Bitcoin (BTC) products in the market.
Despite this milestone, corporate adoption in the industry is still considered to be in its infancy, as highlighted by Marc Degen, the co-founder and chairman of Trust Square, a technology hub focused on blockchain.
During his address at the Web3 Corporate Innovation Day, Degen emphasized that the inflows of the spot Bitcoin ETFs are still relatively low compared to traditional finance. He pointed out that since their launch, the U.S. spot Bitcoin ETFs have accumulated $58.4 billion in total on-chain holdings, as reported by Dune.
In contrast, JPMorgan, a major player in wealth management, reported a record $489 billion in net new client inflows in 2023 alone, as disclosed by Jeremy Barnum, JPMorgan’s chief financial officer, during an earnings call in January. This means that JPMorgan alone has attracted more than eight times the inflows of all eleven U.S. spot Bitcoin ETFs combined.
The primary reason for the slow pace of adoption of digital assets is the lack of mainstream trust in the crypto industry. A study by Pew Research Center in 2023 revealed that approximately 75% of individuals who are aware of cryptocurrencies do not have confidence in the reliability and safety of digital assets.
To build more trust among mainstream users, Degen believes that corporations play a crucial role. He pointed out that new crypto adopters tend to trust corporate-backed centralized exchanges (CEXs) over decentralized exchanges (DEXs), as evidenced by the significant difference in trading volume between the two.
According to Dune, the cumulative trading volume on DEXs in the past 24 hours amounted to $3.86 billion, which is nearly five times less than the $17.6 billion trading volume generated by Binance, the world’s largest CEX.
When examining Bitcoin ETF inflows and crypto adoption as a whole, it is important to consider the broader context. The total inflows of Bitcoin ETFs do not fully capture the institutional adoption since the launch of these products. This is partly due to Grayscale’s Bitcoin Trust ETF (GBTC) accounting for a large portion of outflows, impacting the overall cumulative inflows of the ETFs.
To date, Grayscale’s GBTC has sold 18,207 BTC worth over $1.19 billion, representing the majority of outflows, as reported by Farside Investors data.