US and Canada Bitcoin ETFs: The Biggest Buyer vs. The Worst Loser
The Bitcoin ETF market witnessed a significant shift in 2024, with the United States emerging as the dominant force and Canada suffering record outflows.
US Leads the Global Bitcoin ETF Market
The United States claimed the top spot in Bitcoin exchange-traded fund (ETF) investments in 2024, contributing to 100% of the $44.2 billion inflows into crypto exchange-traded products (ETPs). This achievement makes the US the largest holder of Bitcoin ETFs by assets under management (AUM) globally.
In stark contrast, Switzerland, the second-largest buyer of crypto ETPs, only recorded $630 million in inflows—a massive 98% gap compared to the US.
Canada Faces Record Outflows
Canada, which pioneered the first physically settled Bitcoin ETF in 2021, experienced the largest crypto ETF outflows in its history, totaling $707 million in 2024. This marked a sharp reversal from the country’s earlier success, driven by a migration of investors to more liquid US Bitcoin ETFs.
Why the US Dominates Bitcoin ETFs
The US’s dominance in Bitcoin ETFs stems from its role as the largest ETF market globally, accounting for $10.5 trillion of the $15 trillion global ETF market.
- Investor Familiarity: Decades of trust in the ETF structure have cemented the US’s position as the primary market for such products.
- Capital Market Leadership: The US stock market represents over 60% of global stock market capitalization, making it a natural leader for Bitcoin ETFs.
- Investor Appetite: US investors are historically more open to risk, particularly in the technology sector, giving Bitcoin ETFs a strong foundation for growth.
Canada’s Decline: From $4.2B Inflows to $707M Outflows
Canada’s crypto ETF journey has been turbulent:
- 2021 Success: The launch of the Purpose Bitcoin ETF in February 2021 saw an explosive debut, with $564 million in AUM within five days. Canadian crypto ETPs netted $4.2 billion in inflows during their first year.
- 2024 Outflows: The launch of US spot Bitcoin ETFs triggered a shift, as investors moved to US-based products offering higher liquidity and broader participation.
Why Canadian Investors Switched to US Bitcoin ETFs
The migration was driven by regulatory arbitrage that previously benefited Canadian ETFs. Once US spot Bitcoin ETFs launched in 2024, investors gravitated toward these products, drawn by:
- Greater Liquidity: US ETFs provide better trading efficiency.
- Broader Participation: More investors and institutions are engaged in the US market.
- Institutional Support: Backing from major players enhanced credibility.
This shift led to crypto ETFs becoming the only ETF category in Canada to record outflows in 2024, as reported by Bloomberg.
What’s Next for Global Bitcoin ETFs?
With the US dominating the crypto ETF space, it’s unlikely any other market will surpass its AUM. However, European issuers like CoinShares are offering innovative solutions, such as staking yields on ETPs, which could present alternative opportunities for investors.
As the Bitcoin ETF landscape evolves, the US is poised to maintain its leadership, while markets like Canada face challenges in competing with the liquidity and scale offered by US-based products.
