Launch of Bitcoin ETFs drives record investor uptake

Anticipation surrounding the launch of the first Bitcoin spot ETFs has driven a 150% surge in the value of the world’s most popular cryptocurrency, Bitcoin, through 2023, with nearly three-quarters of crypto investors now holding the digital asset, according to new data from the IRCI.

In January this year, the US financial markets regulator the Securities and Exchange Commission (SEC) approved the first US spot bitcoin ETFs, enabling some of the world’s biggest asset managers, including BlackRock, Fidelity, and Ark Invest, to offer the product as a tradable asset to retail investors.

The Bitcoin price has hit a new high of US$52,195 (AU$79,646) per Bitcoin today, up 15% since the SEC’s announcement.

“Bitcoin remains a favourite among crypto investors, with 63% ownership,” the Independent Reserve Cryptocurrency Index (IRCI) wrote in its latest crypto market report.

More than half (52%) of crypto investors prefer Bitcoin over other digital assets, the IRCI said.

Bitcoin is also expected to have another surge after its next “halving” – which effectively cuts in half the reward for mining Bitcoin – set to take place in April.

When this occurs, the block reward will drop from the current 6.25BTC (set in May 2020) to 3.125BTC. This effectively halves the rate at which new bitcoins are released into circulation.

Overall, despite cost-of-living pressures, Australian crypto ownership rates have increased to 27.5%, up from 25.6% in 2022.

By comparison, in 2019, ownership was just 16.8%.

However, cost-of-living pressures have begun to bite crypto investors, the survey revealed. Almost a quarter (24%) said they had considered selling or partially selling their crypto portfolio to help them cope with the rising costs.

Greater regulatory protections would boost Aussies’ crypto uptake

“Australians’ interest and investment in crypto remains high and continues to gain momentum, with sentiment demonstrably shifting to a phase of renewed optimism and growth,” the IRCI wrote.

Adrian Przelozny, the IRCI’s chief executive, said: “The palpable shift in Aussie awareness of, and sentiment towards cryptocurrencies, has been driven primarily by Bitcoin and the global Bitcoin spot ETF approvals, but also by local regulatory reform that will help drive investment, provide certainty to the sector and ultimately, increase consumer protection”.

Under a new regulatory regime for cryptocurrency exchanges, the Federal Government will mandate that crypto exchanges hold an ASIC-issued financial services licence in an effort to reduce risks for investors.

According to the survey, Australians currently not invested in crypto called for more regulation (36%) and better consumer protections (38%) before investing.

Conducted annually, and now in its fifth year, the IRCI is a national survey providing a benchmark for the awareness, trust and confidence that everyday Australians have in digital currencies. The 2023 survey was postponed to early 2024 to capture the impact of the Bitcoin spot ETF, approved in January 2024.