In this "View From The Field," we deep-dive into one of our ten venture predictions as outlined in our 2024 Outlook Report.

2024 Prediction #2: The launch of crypto ETFs will drive a resurgence of interest in blockchain technology

The history of cryptocurrency traces back to the late 20th century, with precursors like David Chaum's DigiCash in the 1980s and Wei Dai's proposal for "b-money" in 1998. However, it wasn’t until 2009 when an anonymous programmer or group of programmers under the pseudonym Satoshi Nakamoto developed and designed a decentralized digital asset using cryptography that Bitcoin was born. Bitcoin's innovative use of blockchain technology, to secure transactions without the need for central authorities pioneered a new form of digital currency. Over the years, cryptocurrencies evolved beyond a niche fascination into a global phenomenon, sparking debates about decentralization, regulation, and it’s potential to revolutionize finance. 

Bitcoin has experienced a tumultuous and transformative journey in terms of its value and adoption over the years. Initially valued at fractions of a cent, the cryptocurrency saw a gradual rise in value as its decentralized nature gained recognition. As with many new and disruptive technologies, the market started identifying/exaggerating new business opportunities that utilized the blockchain technology and assumed adoption would be swift. This drove the first significant surge in Bitcoin prices in 2013 when its value peaked at over $1,000 before plummeting shortly afterward. Subsequent years witnessed a pattern of volatile spikes and corrections, as new use cases came and went (including the advent of ICOs that “were going to replace the IPO market”), with notable milestones including the 2017 bull run that saw Bitcoin's value skyrocket to nearly $20,000, before entering its first  “crypto winter”. 2021 and 2022 were difficult years with a lot of regulatory scrutiny, failed business models, and several bankruptcies that heavily questioned the utility of Bitcoin and the crypto landscape as a whole. Having survived through that period, the excitement around Bitcoin resurfaced in late 2023 with the possibility of a spot-based Bitcoin ETF nearing approval. 

In January 2024, after over 10 years of rejections from the SEC, the first spot Bitcoin ETF for trading in the US was approved, signaling a major shift in regulatory attitudes towards digital assets. Though Canada beat us to the punch and launched the first-ever spot Bitcoin ETF in 2021, the approval by the SEC opened the door for a broader range of investors including institutional giants such as Blackrock and Fidelity to participate in the market. These ETFs offer a convenient way for individuals to gain exposure to the crypto market without the complexities and risks associated with owning cryptocurrencies today.

As seen by the charts below, over the last three months since the ruling, Crypto spot ETF trading volumes have seen historic interest in their first few months of trading. The shift is a testament to Bitcoin’s unstoppable trajectory toward becoming mainstream and an integral part of the financial landscape serving as a store of value, a hedge against inflation, and an attractive portfolio diversifier.

The recent adoption of ETFs certainly has brought blockchain technology back into the spotlight and has helped legitimize blockchain technology in the eyes of regulators and institutional investors paving the path for wider adoption across various industries. 

In a world brimming with possibilities, the future of blockchain technology shines brightly as a beacon of innovation, collaboration, and boundless potential. As we journey forward, embracing the transformative power of blockchain promises a landscape where trust, transparency, and efficiency converge to create a tapestry of progress and prosperity for all.

All the best, 

John N. Ailanjian, CFA
Managing Partner

Caleagh Creech
Director, Direct Investments