Bitcoin ETF demand is mostly driven by everyday investors rather than big institutions, according to a new Binance report.
As of October 25th in a Binance report, nearly 80% of the total assets under management (AUM) in spot Bitcoin ETFs came from non-institutional investors.
Spot Bitcoin ETFs launched in January 2024, attracting $21.6 billion in net inflows over 10 months.
However, Binance analysts noted that much of the ETF’s $63.3 billion AUM wasn’t entirely new investment. Instead, a large portion came from retail investors moving their Bitcoin holdings from digital wallets and exchanges to these funds, which offer better 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,” wrote Binance.
Institutional Bitcoin ETF demand grows
Retail investors are the biggest investors in Bitcoin ETFs, but interest from institutions is growing too. According to Binance analysts, investment advisers and hedge funds are the fastest-growing groups investing in these funds.
Still, many big institutions haven’t fully jumped in, and those that have are cautious with their money. For example, Vanguard, one of the largest ETF providers, has refused to offer Bitcoin or crypto ETFs. On August 14, Vanguard’s new CEO, Salim Ramji, confirmed the company’s decision, saying they won’t be launching any crypto ETFs.
Binance analysts said this careful approach is common among traditional financial companies entering the crypto world.
“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,” in the report.
Bitcoin ETFs have seen a big spike in investments recently, but one analyst warns that a price drop could be coming soon.
From October 11 to 23, spot Bitcoin ETFs brought in a total of $2.88 billion, with only one outflow of $79.1 million on October 22. This outflow was just 2.7% of the total inflows, based on data from Farside.
