Vanguard’s ‘Degen Switch’ Flips, Sparks Bitcoin’s 10% Explosion

Bitcoin (BTC) price surged more than 6% on Wednesday, pushing toward the $94,000 threshold during the early hours of the Asian session. It comes just hours after Vanguard lifted its long-standing ban on trading Bitcoin ETFs.

The sudden rally triggered one of the strongest intraday moves of the quarter, raising new questions about how much conservative capital may now flow into crypto markets.

A Sudden Bitcoin Price Spike as Vanguard Flips Its Crypto Stance

The Bitcoin price surged above $93,000 on Wednesday, adding over $200 billion to its market capitalization in 36 hours.

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The surge began during the US opening on Tuesday. It put Bitcoin on track for its biggest daily gain since May 2021, as the pioneer crypto approached $91,000, with levered short liquidations surging.

According to ETF analyst Eric Balchunas, this surge is attributed to the “Vanguard Effect,” which occurred on the first day after the firm lifted its ETF ban.

As BeInCrypto first reported on December 1, Vanguard has ended its years-long crypto ban. Now, it allows trading of Bitcoin, Ether, XRP, Solana, and other regulated crypto ETFs and mutual funds.

This marks a dramatic departure from its previous position. For years, Vanguard executives have argued that crypto lacks intrinsic value, produces no cash flows, and does not fit long-term retirement strategies.

The firm rejected Bitcoin ETFs after their January 2024 debut and even restricted customer purchases of competing funds. However, from as early as January 2024, analysts predicted the firm would soften its stance.

Notably, its restrictive stance had compelled many Vanguard customers to redirect their funds to alternative firms. The backlash from clients was swift and decisive, with Vanessa Harris, a former Vanguard client, sharing her experience.

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The post has since been taken down.

Nonetheless, sustained customer demand, combined with Bitcoin ETFs becoming one of the fastest-growing product categories in US fund history, has forced a strategic reassessment.

Vanguard now says Bitcoin and crypto ETFs have been “tested and performed as designed through multiple periods of volatility.”

While the firm still refuses to launch its own crypto products or support meme coin-linked funds, opening access alone represents one of the most significant institutional shifts of 2025.

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Institutional Momentum Surges Through IBIT and Vanguard

Balchunas highlighted that BlackRock’s IBIT ETF reached $1 billion in trading volume within the first 30 minutes, with Vanguard saving Bitcoin just before the Christmas holiday, when trading momentum typically begins.

The wave of inflows was not limited to Balchunas’ observations. Analyst Crypto Rover said the price action was no mystery.

Separately, market watcher Vivek Sen reported that Bitcoin ETF volume on Vanguard surpassed $1 billion within the first 30 minutes, describing the surge as “wild.”

These rapid inflows suggest that a portion of previously blocked demand, comprising conservative, retirement-oriented investors who could not access Bitcoin ETFs, may have entered the market as soon as the restriction disappeared.

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One-Off Burst or the Start of a Larger Trend?

Despite the excitement, analysts remain divided on whether Vanguard’s reversal marks a structural shift. When asked whether this is a short-term effect after the ban is lifted, or if it is the beginning of a systemic flow of conservative capital into Bitcoin ETFs, Balchunas urged caution.

The remark highlights a key tension, that while institutional-grade access is expanding, the long-term behavior of traditional investors remains uncertain.

Bitcoin, Ethereum, XRP, and Solana, among cryptocurrencies featured in Vanguard’s new pivot, are rallying. BTC was trading for $93,562 as of this writing, up by nearly 10% in the last 24 hours.

If conservative capital continues to flow into IBIT and other spot ETFs, the market could enter a new phase of liquidity expansion. However, if this spike was merely the release of pent-up demand, momentum may cool quickly.

Either way, Vanguard’s reversal ensures that the wall between traditional finance and crypto just got much thinner, and investors are reacting fast.