Bitcoin's $25 Billion Legacy Exodus: How Wall Street Cemented Its Grip on Liquidity Within 2 Years

Source: CryptoNewsNet Original Title: Bitcoin’s $25 billion legacy exodus secretly cemented Wall Street’s grip on liquidity within 2 years Original Link:

The Rise of Bitcoin in Traditional Finance

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

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 Farside data.

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, Then 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.