Retail investors are leading the adoption of spot Bitcoin exchange-traded funds (ETFs), accounting for 80% of total demand, according to a study by Binance Research. report.
According to the report, Bitcoin ETFs have seen accelerated adoption since their debut, with cumulative holdings now reaching over 938,700 BTC – approximately $63.3 billion in assets under management (AUM) – representing 5.2% of the total Bitcoin supply, according to a recent report from Binance. Research.
The report highlights that net inflows for these ETFs have consistently exceeded initial projections, demonstrating strong investor demand that has led to a market reshaping of both pricing conditions and institutional interest.
Stable demand
The report noted that spot Bitcoin ETFs drive steady demand by removing approximately 1,100 BTC from circulation per day. Unlike gold ETFs, Bitcoin ETFs collected over $20 billion in net inflows within the first ten months of trading, eclipsing the $1.5 billion gold ETFs collected in their debut year.
Additionally, institutional buy-in has increased dramatically, with over 1,200 institutions participating, compared to the modest 95 institutions that joined in the gold ETFs’ first year. Despite this institutional growth, retail investors remain at the core of the market, accounting for approximately 80% of ETF investments, underscoring Bitcoin’s popularity among non-institutional investors.
The report noted that many of these retail investors are not entirely new to crypto, but are moving their holdings from digital wallets and exchanges to ETFs, seeking the added legal protection and convenience these funds provide. This shift highlights the unique role Bitcoin ETFs play in providing a simplified, accessible entry point for individual investors while keeping demand robust.
Despite this dominance of retail buyers, institutional interest has also grown significantly, with over 1,200 institutions investing in spot BTC ETFs in less than a year. This pace of adoption is much higher than that of the early gold ETFs, which saw only 95 institutional investors in their first year.
However, retail buyers continue to drive the pace of demand, with their holdings up 30% since the first quarter, largely thanks to self-directed investors using online investment accounts.
Market stability and liquidity
A defining characteristic of these ETFs is their broader impact on market stability and liquidity. Since the launch of spot ETFs, Bitcoin spot trading volume has increased significantly, with an average daily trading volume increase of 66.9% year-over-year.
Market depth, a measure of Bitcoin’s liquidity, has improved as institutional participants and market makers inject additional capital, leading to tighter spreads and reduced price volatility.
This evolving liquidity profile has attracted more traditional investors, with some companies even using Bitcoin as collateral in structured loans, a practice previously reserved for more conventional assets.
The report also details a shift in sentiment as Bitcoin’s correlation with traditional financial indicators, such as the S&P 500, reaches historic highs. This trend is seen as a reflection of Bitcoin’s dual role as a growth asset and as a hedge against macroeconomic volatility.
According to Binance Research, the ETF flows reflect broader shifts in market sentiment, strengthening the integration of the flagship crypto into the traditional financial sector.