Retail investors are quiet, but spot Bitcoin ETF assets are growing, signaling a potential future shift

Onchain metrics show retail investors are quiet, but spot Bitcoin ETF assets under management are growing. Retail investors hold the majority of ETF shares, with direct demand possibly dormant but not dead. Retail demand may be flowing through traditional finance rails, changing how the Bitcoin market is viewed.

Since the launch of spot Bitcoin ETFs in the US in January 2024, institutions like investment advisors and hedge funds are buying ETFs. ETF shareholders collectively own approximately $135 billion in Bitcoin. Investment advisers account for nearly half of ETF assets, with hedge funds, brokerages, and holding companies also holding significant shares.

The success of spot Bitcoin ETFs suggests retail interest, even if not visible onchain. Retail participation in ETFs remains high, with close to 75% of US spot Bitcoin ETFs owned by retail investors. The explosive growth of ETFs indicates a shift in how retail investors access Bitcoin, preferring brokerage accounts over self-custody wallets.

Despite strong ETF demand, Bitcoin’s price remains under pressure. Current inflows are not enough to offset ongoing outflows, indicating a need for a major catalyst to reignite demand. Interest rate cuts could serve as a trigger for increased demand, benefiting institutions and their clients who play a growing role in the Bitcoin ecosystem.

While wealthier US investors may choose exposure via ETFs, retail participants in other countries may continue to buy and hold BTC directly. Direct retail demand may not have disappeared, but rather shifted to different channels. In the right conditions, direct retail demand could resurface, indicating a potential future shift in the market landscape.

Read more at Cointelegraph: Where Did Bitcoin’s Retail Go? Look Offchain