Vanguard’s “Degen Effect” Sparks 10% Rally for Bitcoin in Remarkable Rebound

Bitcoin (BTC) experienced a notable increase of over 6% on Wednesday, nearing the $94,000 mark during the early Asian trading hours. This surge followed Vanguard's decision to lift its longstanding restrictions on trading Bitcoin ETFs.

Key Takeaways

Bitcoin price increases more than 6% to approach $94,000 after Vanguard lifts its Bitcoin ETF trading ban.
Over $200 billion added to Bitcoin's market cap within 36 hours.
Vanguard has switched its policy, now allowing many regulated crypto products.
Analysts express varying views on whether this surge foreshadows a lasting trend or is just a short-term spike.

This unexpected rally prompted one of the most significant intraday movements of the quarter, raising intriguing questions about the potential influx of conservative capital into the cryptocurrency markets.

Bitcoin's Price Jump Following Vanguard's Policy Change

On Wednesday, Bitcoin's price soared past $93,000, adding more than $200 billion to its market capitalization within just 36 hours.

The rally began with the US market's opening on Tuesday, positioning Bitcoin for its largest daily percentage increase since May 2021. The price climbed toward $91,000, while leveraged short liquidations surged concurrently.

"This surge aligns with the 'Vanguard Effect,' which surfaced on the first trading day after they lifted their ETF ban," said ETF analyst Eric Balchunas.

Eric Balchunas highlighted this event on social media, stating, “Bitcoin jumps 6% right around the US open on first day after Bitcoin ETF ban was lifted. Coincidence? I think not. With $1 billion in IBIT volume in just the first 30 minutes of trading, it seems there’s a bit of ‘degen’ spirit among even the most conservative investors.”

As first reported by BeInCrypto on December 1, Vanguard has officially ended its years-long prohibition on crypto trading. Now, the firm allows investments in Bitcoin, Ether, XRP, Solana, and other regulated crypto ETFs and mutual funds.

This marks a significant change from its prior stance. For many years, Vanguard executives contended that cryptocurrencies lacked intrinsic value, offered no cash flows, and did not serve long-term retirement strategies.

The firm had rejected Bitcoin ETFs following their January 2024 launch and even limited client purchases of competing funds. Nevertheless, analysts had predicted a potential policy softening as early as January 2024.

Balchunas stated, “Vanguard’s anti-Bitcoin ETF stance was consistent with their brand and would’ve made Bogle proud. However, I believe they’ll soften over time as they develop their advisory business and need to include alternative asset classes.”

This rigid policy had driven many Vanguard customers to shift their investments to rival firms. Dissatisfied clients voiced their frustrations, including Vanessa Harris, a former Vanguard client, who shared, “I just fully transferred my retirement account from Vanguard to Fidelity because Vanguard won’t support Bitcoin ETFs, and appears to be manipulating Bitcoin’s price by only allowing people to sell GBTC, not buy.”

Despite her complaints being eventually removed, the demand from clients, combined with Bitcoin ETFs rapidly becoming one of the fastest-growing product categories in American finance, has forced Vanguard to reconsider its strategy.

Vanguard now acknowledges that Bitcoin and crypto ETFs have “demonstrated functionality and performance through numerous periods of volatility.”

While the company has yet to launch its own crypto products or endorse funds linked to meme coins, this move towards increased access signifies one of the most substantial shifts in institutional attitudes for 2025.

Institutional Momentum Intensifies Through IBIT and Vanguard

Balchunas pointed out that BlackRock’s IBIT ETF saw a staggering $1 billion in trading volume within the first half hour, particularly with Vanguard facilitating Bitcoin trading just ahead of the Christmas holiday, a time when trading activity typically spikes.

He remarked, “Vanguard saving Bitcoin was not on my 2025 bingo card, I can tell you that.”

Furthermore, the signs of increased inflows were corroborated by market analyst Crypto Rover, who stated, “This is why Bitcoin skyrocketed... Vanguard just lifted its Bitcoin ETF ban, allowing a wave of new institutional investors to enter through BlackRock’s $IBIT ETF. In fact, BlackRock’s $IBIT accounted for over $1.8 billion in trading volume in just the first two hours.”

Market observer Vivek Sen also reported that Bitcoin ETF transactions on Vanguard surpassed $1 billion in under 30 minutes, describing the surge as “wild.”

These quick inflows indicate that part of the previously suppressed demand from conservative, retirement-focused investors may have entered the market now that restrictions have been removed.

A One-Time Surge or the Start of a Broader Trend?

Despite the enthusiasm, analysts are divided on whether Vanguard's policy change signifies a lasting trend. When asked whether this is merely a short-term response to lifting the ban or if it represents a consistent influx of conservative capital into Bitcoin ETFs, Balchunas urged patience.

“I doubt it. I think only a small percentage of people were pent-up. While it’s positive to have access to these platforms, you can’t rely on ETF Boomers for everything,” he advised.

This commentary underscores an essential tension: while institutional access is expanding, the long-term reactions of traditional investors remain uncertain.

As of this writing, Bitcoin, Ethereum, XRP, and Solana are all seeing gains following Vanguard’s shift, with Bitcoin priced at $93,562, reflecting nearly a 10% increase in the past 24 hours.

Bitcoin and Altcoins’ Price Performance. Source: CoinGecko

If conservative capital continues to flow into IBIT and other spot ETFs, it could signal a new phase of liquidity in the market. Conversely, should this recent spike signal only the release of pent-up demand, momentum may quickly dissipate.

Regardless, Vanguard's change ensures that the divide between traditional finance and crypto has narrowed significantly, prompting fast reactions from investors.