Retail Investors Drive Most Bitcoin ETF Activity
According to new research from crypto exchange Binance, retail investors are driving the majority of demand for spot Bitcoin exchange-traded funds (ETFs).
In an October 25 report on crypto ETFs, Binance analysts revealed that as of October 10, non-institutional investors made up nearly 80% of the total assets under management (AUM) in spot BTC ETFs.
Spot Bitcoin ETFs, launched in January 2024, have seen $21.6 billion in net inflows within the 10 months since their introduction, marking a pivotal moment for the crypto sector.
Binance analysts noted that much of the $63.3 billion in assets managed by these funds is not necessarily fresh capital entering the crypto market.
Instead, a “notable portion” of this activity likely reflects retail investors shifting their holdings from digital wallets and centralized exchanges into ETFs, which offer enhanced regulatory protections.
“Spot ETFs are serving dual roles: not only onboarding new investors but also attracting existing investors who prefer the regulated structure of ETFs over other, more complex options, such as direct on-chain holdings or illiquid, high-fee alternatives like Grayscale’s Bitcoin Trust,” Binance stated.
While retail investors dominate fund inflows, Binance analysts also observed an increase in demand from institutional clients, particularly investment advisers and hedge funds, who are the fastest-growing groups of interest.
However, many institutions remain hesitant to engage deeply with Bitcoin funds, deploying capital cautiously.
Despite the growing interest in Bitcoin ETFs, Vanguard—a major U.S. investment firm—has famously resisted launching any Bitcoin or crypto ETFs.
Salim Ramji, Vanguard’s new CEO, reiterated this stance on August 14, stating the asset manager would “not be launching any crypto ETFs.”
This “cautious approach” reflects the typical strategy of traditional financial (TradFi) institutions when engaging with the crypto space, Binance analysts noted.
“Although institutions are expected to drive trade sizes higher over time, there hasn’t been a material change over the year, likely due to volatile market conditions and global liquidity uncertainties,” the report added.
In recent weeks, Bitcoin ETFs have seen an “unusually large” volume of inflows, prompting one analyst to caution about a possible near-term price drop.
Between October 11 and 23, spot Bitcoin ETFs recorded a total of $2.88 billion in inflows, with only one day of outflow, amounting to $79.1 million, or 2.7%, on October 22, according to Farside data.
Sources:
https://www.binance.com/en/research/analysis/spot-etfs-in-crypto-markets/
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