According to a new research report from the cryptocurrency exchange Binance, retail investors currently account for the majority of demand for spot Bitcoin ETF funds.
Binance analysts reported that as of October 10, retail investors accounted for nearly 80% of total assets under management (AUM) in spot Bitcoin ETFs.
Source: Binance
Spot Bitcoin ETF funds were launched in January 2024, marking a significant milestone for the cryptocurrency market and attracting $21.6 billion in net inflows in just 10 months since their launch.
Binance analysts point out that the majority of the $63.3 billion in assets accumulated in spot Bitcoin ETFs since their launch is not necessarily new capital flowing into the cryptocurrency market. Instead, a significant portion of purchases may stem from retail investors transferring assets from wallets and centralized exchanges to funds that offer better regulatory protection.
"Spot ETFs are playing a dual role, attracting not only new investors but also appealing to existing investors who prefer the managed structure of ETFs over other complex options such as direct on-chain holdings or less liquid, high-cost products like Grayscale's Bitcoin Fund."
Demand from institutions continues to rise
Although retail investors account for the majority of capital invested in ETF funds, demand from institutions is also increasing, especially from investment advisors and hedge funds. However, many institutions remain cautious about deploying capital into Bitcoin funds, with some large organizations still not fully participating in this market.
Investment advisors and hedge funds are the organizations most interested in Bitcoin ETFs | Source: Binance
While many large financial companies have tried to capitalize on the Bitcoin ETF craze, the leading American investment group Vanguard has firmly rejected spot Bitcoin ETFs. As the second-largest ETF issuer in the world, Vanguard, under the leadership of new CEO Salim Ramji, reaffirmed its anti-cryptocurrency stance on August 14 by stating it would "not launch any cryptocurrency ETFs."
Binance analysts stated that this "cautious approach" aligns with how TradFi institutions typically interact with the cryptocurrency sector.
"Although there is an expectation that institutions will increase trading volumes over time, there has not yet been any significant change this year, possibly due to volatile market conditions and global liquidity uncertainty."
The influx of funds into Bitcoin ETF funds is a strong increase that may be a negative sign
Bitcoin ETFs have witnessed a "tremendously large" influx of funds in recent weeks, leading to warnings about the possibility of Bitcoin prices dropping in the short term.
According to data from Farside, from October 11 to 23, spot Bitcoin ETFs attracted a total of $2.88 billion in inflows, with only one day of outflows amounting to $79.1 million on October 22 — a relatively low outflow of just 2.7%.
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