Spot Bitcoin (BTC) ETFs See $21.6B in Net Inflows, Now Hold $63.3B in AUM: Binance Research

Retail investors constitute the main driving force behind Bitcoin ETF demand, accounting for nearly 80% of assets under management (AUM) in spot Bitcoin ETFs

Retail investors are driving demand for Bitcoin exchange-traded funds (ETFs), accounting for nearly 80% of assets under management (AUM) in spot Bitcoin ETFs, a report by Binance revealed on Oct. 25, 2024.

These ETFs, launched in January 2024, have seen $21.6 billion in net inflows within ten months. A large portion of the $63.3 billion AUM in spot Bitcoin (BTC) ETFs comes not from new capital but from retail investors reallocating assets from other holdings into the funds, the report showed.

Many retail investors have moved their Bitcoin from digital wallets and exchanges to ETFs, which offer greater regulatory protections, Binance’s analysis found.

“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,” the report stated.

The regulated structure of ETFs provides retail investors with an easier way to invest in Bitcoin, compared to options like Grayscale’s Bitcoin Trust, which comes with higher fees and lower liquidity.

In under a year, spot #Bitcoin ETFs have drawn US$18.9B+ in net inflows, now holding US$63.3B, making them the third-largest segment of BTC holders.

Our latest #Binance research dives deeper into how these ETFs are shaping crypto markets.

Check it out ⬇️https://t.co/8U9UMeUgwC

— Binance Research (@BinanceResearch) October 25, 2024

Institutions Cautious Despite Rising Demand

While retail investors are driving most of the demand for Bitcoin ETFs, Binance’s report also showed a gradual increase in interest from institutions, particularly investment advisers and hedge funds.

However, institutional capital in spot Bitcoin ETFs remains limited, as many firms in the traditional finance sector are still taking a cautious approach to digital assets.

For instance, Vanguard, one of the largest ETF issuers in the U.S., has remained on the sidelines. On Aug. 14, 2024, Vanguard CEO Salim Ramji stated that the investment giant would not be launching any crypto-related ETFs.

“This ‘cautious approach’ aligns with how TradFi institutions typically engage with the crypto sector,” the report added.

Recent Surge in Capital Inflows to Bitcoin ETFs

Binance noted a significant increase in capital inflows to Bitcoin ETFs in recent weeks. From Oct. 11 to Oct. 23, these ETFs gained $2.88 billion in new capital, with only a single day of outflows, totaling $79.1 million.

During this same period, the digital asset market also saw renewed investment interest, with a $2.2 billion inflow for the week, marking the highest since July.

Most of these inflows were concentrated in Bitcoin, contributing $2.13 billion, while short Bitcoin products attracted $12 million, the highest since March.

Binance attributed this increase in demand for Bitcoin ETFs to positive investor sentiment, which reflected expectations of a more favorable regulatory landscape following the upcoming U.S. elections.

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