Compiled by: Baihua Blockchain.
When Bitcoin breaks $100,000 in December 2024, it will not just be another price milestone, but the culmination of a larger event. In January 2024, the SEC approved the spot Bitcoin ETF, fundamentally changing the way institutional funds flow into cryptocurrencies, and we are witnessing this outcome in real time.
What impresses me about this moment is that after years of regulatory resistance, approval not only legitimized Bitcoin but also created a whole new layer of infrastructure that traditional finance can access. The result? Bitcoin has rapidly transformed from a digital curiosity to a portfolio essential, with a speed that exceeded everyone's expectations.
The real interesting part is the transformation of infrastructure. These are not traditional investment products. Spot Bitcoin ETFs hold actual bitcoins, not contracts or derivatives. You can think of it as holding physical gold bars in a gold ETF, except here the 'vault' is digital, and the custodians are companies well-versed in crypto technology, suddenly managing billions of institutional funds.
Of the 12 spot Bitcoin ETFs currently trading, 9 rely on Coinbase for custody.
Coinbase holds custody of 9 out of 12 Bitcoin ETFs, which brings both competitive advantages and concentration risks. This dominance in infrastructure creates stable revenue but also raises questions about single points of failure in the crypto ecosystem.
This is not by chance; the market recognizes that crypto infrastructure requires crypto expertise. Traditional banks that have talked for years about 'blockchain solutions' suddenly realize they need companies that truly understand how to safeguard digital assets at an institutional scale.
This concentration brings interesting dynamics. Coinbase has transformed from a platform dependent on trading fees (making a fortune in bull markets and starving in bear markets) to a key financial infrastructure. ETF custody generates predictable revenue regardless of market sentiment. It's like changing from a casino to a bank handling casino funds.
The data speaks for itself. Coinbase achieved its best performance ever in 2024, and analysts expect huge growth in 2025. The company has transformed from following the crypto wave to becoming the infrastructure for institutional wave impacts.
But the role of infrastructure will attract competition, and Robinhood is catching up in a different way. Coinbase focuses on institutional custody and compliance, while Robinhood targets retail investors frustrated with crypto complexity.
The ETF revolution has changed the revenue model for crypto platforms. Trading fees have dropped from 70% to 35%, while infrastructure services have increased from 15% to 45%, creating a more predictable business model that reduces reliance on market volatility.
Robinhood's recent moves reflect this strategy: launching tokenized US stocks in Europe, staking major cryptocurrencies, perpetual futures trading, and a custom blockchain for real-world asset settlement. Robinhood is building an entry for mass adoption, while Coinbase manages the treasury.
Robinhood's commission-free crypto trading and simplified user experience are gaining market share, especially in a context where regulatory clarity reduces friction. Record trading volumes and analysts' optimistic predictions for 2025 indicate that this retail-centric approach complements rather than directly competes with institutional infrastructure.
There is also BTCS Inc., which provides a completely different set of lessons. As the first cryptocurrency company listed on Nasdaq in 2014, BTCS represents the pure play of crypto business models. The company pioneered 'Bividends' (paying dividends to shareholders in Bitcoin instead of cash) and operates blockchain analysis while holding direct crypto assets.
BTCS currently holds 90 bitcoins and is expanding to 12,500 ethers through strategic financing. The company demonstrates how crypto-native enterprises can adapt in institutional validation without giving up their core principles. While giants compete for infrastructure dominance, professional players are also exploring sustainable niche markets.
What makes this ecosystem transformation exciting is how quickly traditional finance has absorbed what should have been a disruptive technology.
Spot Bitcoin ETFs solve the institutional access issue by providing compliant investment tools. The chart below shows how different types of investors can gain exposure to Bitcoin without directly holding crypto assets.
ETFs provide institutional investors with the required compliant packaging, transforming cryptocurrencies from alternative assets into part of a portfolio.
The regulatory environment suggests that this acceptance is permanent. Political leaders publicly support cryptocurrencies as part of national strategic infrastructure, and the SEC's ongoing evolution indicates that the framework will expand rather than contract. Ethereum ETFs, multi-crypto funds, and integration with traditional wealth management are logical progressions.
Institutional behavior confirms this maturity. Recent filings show that in the volatility of Q1 2025, some asset management companies reduced their Bitcoin ETF positions, while others allocated for the first time. This is not speculation but portfolio management. Institutions view cryptocurrencies as an asset class requiring risk assessment and allocation decisions.
The infrastructure supporting this transformation continues to solidify. Custody solutions have evolved from exchange wallets to institutional-grade security. Trading infrastructure handles billions of transactions daily, with no longer the failures common in early crypto markets. The regulatory framework provides clarity for compliance officers anxious about digital assets.
Market structure reflects this evolution. Price discovery occurs on regulated exchanges with institutional participation, rather than scattered crypto-only platforms. Liquidity comes from various sources, including algorithmic trading, institutional arbitrage, and retail participation through familiar brokers.
But what I find most striking is that we are witnessing the creation of parallel financial infrastructure, rather than a replacement of existing systems. Cryptocurrencies have not disrupted traditional finance but have forced it to build systems compatible with crypto.
Coinbase serves as a bridge between the Bitcoin network and institutional custody demands. Robinhood creates crypto trading that feels like stock trading. ETF providers package crypto exposure in familiar investment tools. Each player addresses specific friction points rather than demanding a full adoption of a new paradigm.
This infrastructure approach explains why the approval of Bitcoin ETFs triggered such drastic price fluctuations.
The acceleration of Bitcoin's price is directly related to milestones in ETF infrastructure, rather than speculative bubbles. The correlation between regulatory developments, ETF trading volumes, and sustained price increases indicates that institutional demand is driving the market.
Institutional funds are not waiting for cryptocurrencies to mature; they are waiting for compliant access methods. Once these methods exist, allocation decisions will follow standard portfolio logic rather than speculation.
The winners of this transformation may not be the platforms with the most users or the highest trading volumes. They are those companies providing reliable infrastructure for an asset class that institutional investors can no longer ignore.
Success metrics are also changing. Revenue stability is more important than growth rates. Regulatory compliance brings competitive advantages. Technological reliability determines institutional trust. These factors favor mature players with resources to build robust infrastructure rather than startups promising disruption.
Looking ahead, the infrastructure is already in place. The regulatory framework continues to evolve in a supportive manner. Institutional adoption follows a predictable model based on risk tolerance and allocation models. The speculative phase is ending; the phase of infrastructure utilization is beginning.
The revolution is not about Bitcoin prices reaching six figures, but about the infrastructure that makes cryptocurrencies a standard component of diversified portfolios. Companies that build and continue to maintain this infrastructure will control the future of institutional crypto adoption.
This is where true value creation and capture occurs.