80% of Bitcoin ETF demand comes from retail investors: Binance.
Retail investors Retail investors are responsible for the majority of demand for Bitcoin exchange-traded funds, according to new research by crypto exchange Binance.
In a research report on crypto ETFs on October 25, Binance analysts shared that non-institutional investors held nearly 80% of total assets under management (AUM) in BTC ETFs as of October 10.
Retail investors account for nearly 80% of the total Bitcoin ETF AUM. Source: Binance
Spot Bitcoin ETFs launched in January 2024 as a watershed for the crypto and generated $21.6 billion in net revenue within 10 months of being made available to investors.
Most of the $63.3 billion Bitcoin ETF has accumulated under management since its launch in January, Binance analysts said, was not a fresh investment in the crypto space.
Instead, it appears that the “popular part” of the buying activity will be found as retail investors move their holdings from digital wallets and centralized exchanges to the fund, which provides regulatory protections.
“Spot ETFs are serving dual roles: not only onboarding new investors, but also attracting existing investors who prefer the control structure of ETFs to more complex alternatives, such as direct chain holdings, or illegal, high-fee options such as Grayscale's Bitcoin Trust. ,” Binance wrote.
Institutional demand is still growing.
While retail investors account for the lion's share of the funds, Binance analysts point to growing demand from the institutional side, with investment advisors and discretionary funds being the two fastest-growing funds.
Investment advisors and hedge funds are the institutions most interested in Bitcoin ETFs. Source: Binance
However, many institutions have not yet been able to move forward with Bitcoin funds, and those who have invested are “guarded” in the deployment of capital.
While many large traditional financial institutions have sought to capitalize on the Bitcoin ETF gold rush, US investment giant Vanguard has been prominently positioned to identify Bitcoin ETFs.
Vanguard, the second largest ETF issuer in the world, has repeatedly refused to launch any bitcoin or crypto ETFs. New CEO Salim Ramji reiterated this anti-crypto stance on Aug. 14, saying the asset manager “will not launch any crypto ETFs.”
This “cautious approach” is how TradFi institutions typically engage with the crypto sector, according to Binance analysts.
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“While institutions are expected to increase trades from time to time, there is no material change during the year, possibly due to fluctuating market conditions and global uncertainty,” the report added.
Bitcoin ETFs get into the heat, which can be a bad thing
Bitcoin ETFs have been seeing “unusually large” inflows in recent weeks, prompting one analyst to warn of a near-term decline in Bitcoin's price.
Between Oct. 11 and 23, spot bitcoin ETFs generated a total of $2.88 billion in inflows, with a single day on Oct. 22 of $79.1 million — a relative flow of just 2.7% — according to Farside data.
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