Bitcoin’s $25 billion legacy exodus secretly cemented Wall Street’s grip on liquidity within 2 years

Two years ago, Bitcoin gained something it had chased for a long time: a place in the tradfi default menu.

Plenty of people could get exposure to Bitcoin in 2023, as anyone with an exchange account and a tolerance for operational risk could click “buy.” Yet most capital in the US moves through brokerages, retirement accounts, advisory platforms, model portfolios, and compliance checklists.

For that money, Bitcoin needed to arrive in a form that looked and felt like the rest of a portfolio.

On Jan. 10, 2024, the SEC approved the listing and trading of spot Bitcoin exchange-traded products. A day later, the first US spot Bitcoin ETFs began trading, and by Thursday afternoon, about $4.6 billion worth of shares had changed hands.

That first session was a historically unmatched success, and it shifted who gets to matter at the margin in Bitcoin’s market.

The biggest change over the past two years comes from a new buyer base flowing in through a familiar wrapper. ETFs helped push Bitcoin out of a primarily crypto-native trading environment and into the system that already distributes mainstream assets at scale.

Put simply, Bitcoin gained an institutional distribution channel.

How Bitcoin got its ticker

The story of Bitcoin ETFs might have culminated in a single date, but it took a decade of failed attempts to reach that point. Spot Bitcoin ETF proposals had been filed, revised, rejected, and refiled as the SEC kept raising concerns around market integrity and surveillance expectations for a product tied to spot markets.

The crucial momentum arrived through a narrowing set of legal and regulatory arguments.

In August 2023, the US Court of Appeals for the DC Circuit ruled that the SEC acted “arbitrarily and capriciously” when it denied Grayscale’s application to convert its Bitcoin trust (GBTC) into a spot Bitcoin ETP while approving Bitcoin futures ETPs. The decision didn’t approve an ETF on its own, but it pushed the SEC to justify why futures-based products could pass muster while spot-based products could not.

By Jan. 10, 2024, Chair Gary Gensler framed the approvals narrowly, calling it an approval of the ETP structure rather than a broader endorsement of Bitcoin. But the markets heard something else: Bitcoin had reached the distribution machinery that controls a large share of the investable wealth in the US.

The two-year scoreboard, without the flow diary

To understand the effect of the ETF era without getting lost in daily totals, we need to start with the cumulative record: the US spot Bitcoin ETF complex has accumulated $56.63 billion in net inflows through Jan. 9, 2026, according to data from Farside.

That’s the headline number for the new marginal bid. The second number explains why early flow narratives were often messy: not all ETF activity represented fresh demand. A large portion reflected rotation.

Farside’s totals show GBTC at −$25.41 billion and IBIT at +$62.65 billion over the same period. That spread captures the defining internal motion of the era: money leaving a legacy wrapper and moving into newer, cheaper, more liquid funds, with BlackRock’s product emerging as the money’s final destination.

Early 2024 produced plenty of outflow headlines. Many of those days saw robust buying in newer products while GBTC served as an exit valve for investors who had waited years for a smoother structure.

The result was that the same market could look weak and strong at once, depending on which issuer you focused on.

The new marginal buyer

Bitcoin’s buyer base has always been diverse, ranging from retail traders, miners, long-term holders, funds, and opportunists, but it required at least some crypto fluency. ETFs lowered that bar so aggressively that the identity of the marginal buyer changed completely.

The ETF buyer is an advisor implementing a model, a brokerage investor who wants exposure without custody, or a retirement account allocation executed inside a familiar workflow.

That matters because marginal flows influence marginal pricing. In the ETF era, broad risk appetite can route into spot demand with fewer operational steps and fewer points where friction kills the trade.

This is where our headline phrase “Wall Street owns the bid” earns its meaning. In practice, it points to a buyer whose actions show up in a form the mainstream market can track, compare, and react to in near-real time. It also describes a shift in narrative power: flows have become an easy, shared language between TradFi and crypto.

Farside’s average line helps frame what steady demand looks like. The total spot Bitcoin ETF complex averaged $113.3 million in daily net flows in two years. That’s a meaningful, persistent channel, especially in a market where supply remains fixed.

Of course, flows don’t explain everything, but they do explain why the market increasingly treats ETF creations and redemptions as a daily pulse.

Liquidity arrived fast, and then it concentrated

The first day’s $4.6 billion in trading volume signaled that Bitcoin exposure could be traded at scale on familiar rails. That has very practical, easily measurable consequences. Liquidity tends to compound, as tighter spreads and deeper markets make large allocations easier.

This leads to an improvement in execution, which then makes products easier to recommend.

Source: Farside Investors; LSEG via Reuters (first-day volume).

Over time, liquidity also concentrated. Even when a lineup of products looks similar, capital gravitates toward brands investors already trust and toward the funds that become default choices on platforms.

IBIT’s cumulative total is the clearest measure of that gravity, but the extreme days show the consequences. Farside’s maximum and minimum for the total complex are +$1.37 billion and −$1.11 billion. Sessions like those pull flows from “context” to “driver,” shaping positioning, headlines, and short-term price interpretation.

A market that routes the marginal bid through a handful of massive vehicles will naturally watch those vehicles closely.

ETFs reshaped Bitcoin’s frictions—and how volatility shows up

A straightforward hope sat inside the push for ETFs: package Bitcoin like a stock, and the market will eat it up.

Bitcoin still trades globally, 24/7, with reflexive narratives and a long history of leverage cycles. The ETF wrapper doesn’t change those fundamentals; it does change where the friction sits.

Before ETFs, that friction was operational: custody, exchange access, compliance, and tax structure. After ETFs, much of that friction moved into a familiar format: fees, platform placement, product selection, and the timing of allocations that occur inside mainstream market rhythms.

The GBTC chapter shows friction migrating in real time. GBTC helped traditional investors hold Bitcoin exposure, yet it carried significant structural quirks, including discounts and premiums to NAV, limited redemption mechanics, and, eventually, a fee that looked high next to ETF peers.

Conversion to an ETF delivered a cleaner structure and opened the door for exits and reallocations that had been pent up for a while. The outflows were loud, and they also reflected the market digesting an upgrade.

A bearish read of that period saw institutions selling. A more practical, realistic read focused on structure: investors moving from older wrappers into newer ones as fees compressed and liquidity improved.

The secondary legacy: Bitcoin ETFs became the template

Two years on, spot Bitcoin ETFs function as infrastructure. That status created a second legacy: imitation.

Once Bitcoin proved that a spot crypto asset could be packaged, distributed, and traded at scale in the US, the market gained a clear playbook. The discussion shifted toward the mechanics of success (distribution, fees, platform access, and how legacy structures unwind) because those factors shape who wins once the wrapper exists.

The ETF era also reset expectations inside crypto. It established a benchmark for first-day liquidity, demonstrated how quickly assets can accumulate in a mainstream vehicle, and showed how fast market share can concentrate around one or two dominant products.

Just as important, it built a language bridge. Investors who follow daily creations and redemptions to understand Bitcoin’s demand now have a framework that can extend to other wrappers, whether those are additional spot products, derivatives around the ETF shares, or portfolio strategies that treat Bitcoin exposure as a standard allocation decision.

The wrapper attracted new buyers and established a repeatable model for distributing crypto risk.

What to watch in year three

If the first two years proved the pipe works, the next phase centers on behavior once the pipe is taken for granted.

Three concrete factors matter:

1. Flows now act like a regime signal. Net creations accelerating or slowing has become an input for commentary and positioning. The average day may be $116 million, but the extremes show how quickly the tape can change.
2. Distribution tends to deepen with time. The longer a product trades without operational drama, the easier it becomes for platforms, advisors, and institutions to treat it as normal. And “normal” is what turns an asset from a trade into an allocation.
3. Concentration brings benefits and risks. Dominant funds can tighten spreads and improve execution. They also become points of narrative gravity, and crowded attention can pull markets toward the same story at the same time.

Traditional finance built a fast, scalable pipe to Bitcoin. Two years in, the pipe has grown large enough to influence how Bitcoin gets priced day to day. The ETF era made Wall Street a visible participant in Bitcoin’s marginal bid, and that visibility has become part of the market’s structure.