The growth of digital assets
Over the past decade, the digital assets market has evolved from a highly speculative market to a full-fledged asset class. Whereas digital assets, including Bitcoin, were previously often loathed by the traditional investment world, we are witnessing the tide turn rapidly. In early 2024, for example, we saw the U.S. SEC approve the first Bitcoin spot ETFs.
This financial instrument allows retail, professional, and institutional investors to purchase Bitcoin through traditional channels. Since then, these ETFs have seen a net inflow of over $11 billion. We also see parties such as BlackRock, Fidelity, pension funds, banks, and insurance companies cautiously diversifying part of their portfolios with Bitcoin.
As such, we expect this development to be a significant step toward the next stage of market maturity and to slowly spread to the entire digital assets market. Read more about the market's growth in our Investor's Guide.
Although some small pension funds have experimented with digital assets before, recently the first large pension funds are taking the first step. For example, the ninth largest state pension fund in the United States, The State of Wisconsin Investment Board (SWIB), bought over $164 million worth of Bitcoin in the first quarter of 2024. In terms of a pension fund's service, it clearly shows long-term faith in the industry.
Over the past 5 years, banks and asset managers have changed their attitude from reluctant to embracing digital assets. This started with offering the first custodial services, grew to institutional trading services, and later full offerings to the entire U.S. market through Bitcoin ETFs. Names such as Goldman Sachs, JPMorgan, BNY Mellon, BlackRock, and Fidity all now offer various services to their partners, clients, and investors.
Because of the rapidly developing nature of the market and past incidents, we are also finally seeing significant steps toward clear laws and regulations. For example, governments are experimenting with developing their blockchains and this year the MiCAR regulatory framework will come into force in the EU. This will provide greater clarity, better protect investors, and lower the threshold for new entrants.
With growing adoption and further integration with the financial system, interest from high-net-worth individuals, family offices and institutional parties is also increasing. Along with various (macro) economic conditions, an interesting opportunity currently presents in the digital assets market.
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