According to recent reports from Cointelegraph, Bitcoin’s retail investor demand is far from over; instead, it’s increasingly focused on spot Bitcoin ETFs. Although on-chain metrics suggest decreased activity from retail investors, the assets under management (AUM) of these ETFs tell a different story.
It’s clear that retail investors, either directly or via investment advisors and hedge funds, hold a significant portion of spot Bitcoin ETF shares. Despite a perceived lull in direct retail investor demand, particularly outside the US where self-custody is key, it’s essential to note that it’s not extinct.
There’s a common belief that Bitcoin (BTC) can’t grow due to dwindling retail investor demand, supported by on-chain data showing small wallet activity at a multi-year low. But does this tell the whole story? It appears retail interest remains, just in a different form. This cycle, much of the retail demand seems to be filtering through traditional financial systems: spot ETFs, pension funds, and brokerage accounts.
Since the US launch of spot Bitcoin ETFs in January 2024, Bitcoin has found its way into portfolios of clients who might never have held it directly, due to technical unfamiliarity or unwillingness to self-custody. Institutions also invest in ETFs for their regulatory clarity and ease of accounting. Among these institutions, investment advisors, and hedge funds are the primary ETF holders, managing Bitcoin exposure for both retail and corporate clients. Furthermore, banks, insurers, and pension funds are joining in, offering BTC exposure to their customers.
Collectively, ETF shareholders now possess approximately $135 billion in Bitcoin. According to Bloomberg analyst Eric Balchunas, investment advisors account for nearly half of the $21 billion in assets reported via 13F filings—a growing portion of total ETF exposure. Hedge funds come next with $6.9 billion in ETF shares (about 83,934 BTC), followed by brokerages and holding companies.
The CoinShares report highlights: Goldman Sachs leads among financial advisors with $1.8 billion invested, while Millennium Management tops hedge funds with $1.6 billion.
It’s easy to categorize ETF flows as purely institutional, contrasting the familiar image of a small retail wallet stacking sats. Yet, if the end holder of a BTC ETF share is a retail client, it may be time to rethink how on-chain data is interpreted. This could be the new reality of the Bitcoin market: new retail demand prefers to keep its Bitcoin in a brokerage account, not a self-custodial wallet.
Despite the steady demand from ETFs, Bitcoin’s price remains under pressure. Current inflows, even with ETFs, aren’t enough to counterbalance the ongoing outflows. A significant catalyst, like interest rate cuts, might be needed to stimulate demand. Such a trigger would primarily benefit institutions and their clients, who now play a central role in the Bitcoin ecosystem.
While wealthier US investors may opt for exposure via BlackRock and peers, retail participants in places like Nigeria or Argentina will likely continue to buy and hold BTC directly. So perhaps direct retail demand hasn’t disappeared—it’s just quieter. And under the right conditions, it could reemerge.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
