Key takeaways:
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On-chain indicators suggest retail investors are somewhat inactive, yet ETFs are seeing an increase in assets under management.
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A significant portion of Bitcoin ETF shares is held by retail investors, either directly or through financial advisors and hedge funds.
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Although the demand from individual retail investors seems dormant, it may not be entirely gone, especially outside of the US.
There’s a common belief that Bitcoin (BTC) isn’t making moves upward because retail investors are dwindling. On-chain data seems to back this narrative, showing that activity from small wallets has hit multi-year lows. But is that the complete picture?
It’s possible that retail investors are still active, just not in the ways we’ve been monitoring. There’s a theory that money is flowing through traditional finance routes—like spot ETFs and pension funds—which suggests that retail demand could actually be significant. If we start factoring ETFs as retail participation, it could shift our understanding of the Bitcoin market.
Who is purchasing spot Bitcoin ETFs?
Since the introduction of the Spot Bitcoin ETF in the US in January 2024, Bitcoin has started to enter the portfolios of clients who may lack technical expertise or don’t want to manage it independently.
Institutions are also opting for ETFs for clarity in regulations and simpler accounting. Investment advisors and hedge funds are the primary holders of these ETFs, managing Bitcoin exposure for both retail and corporate entities. Moreover, banks, insurance firms, and pension plans not only retain Bitcoin but also offer it to their customers.
Currently, ETF shareholders own an estimated $135 billion worth of Bitcoin.
Bloomberg Analysts have noted that investment advisors make up nearly half of the $21 billion in assets reported through 13F filings, which marks an increase in overall ETF exposure—now accounting for about 20% of all ETF holdings. Hedge funds hold around $6.9 billion in ETF shares, equivalent to approximately 83,934 BTC, followed closely by securities and holding companies.
According to a report from CoinShares, Goldman Sachs leads among financial advisors with a $1.8 billion investment, while Millennium Management ranks at the top for hedge funds with a $1.6 billion stake.
ETFs can be seen as retail.
While it’s common to think of small retail wallets accumulating Bitcoin, we might be misleading when solely attributing ETF flows to institutions. From that perspective, yes—direct retail demand seems to have vanished.
However, as Andre Dragosch, from Bitwise research, mentioned:
“Retail has so far been the leading distributors of Bitcoin in 2025, based on our calculations. Meanwhile, both corporations and funds have been the biggest sources of Bitcoin this year.”
Yet Dragosh added:
“Since these investment vehicles have a substantial retail component, it’s clear that retail participation has been expressed significantly through ETFs, as indicated by the latest 13F filings in the US.”
If the ultimate holder of a BTC ETF share is a retail client, it may be time to rethink our interpretation of on-chain data. This could represent a new reality in the Bitcoin market. Many retail investors now seem to prefer holding Bitcoin in stock trading accounts rather than keeping it in self-custody wallets. While this somewhat strays from Bitcoin’s original intent, it still resonates with those who view it as an investment.
The remarkable success of Spot ETFs points to retail interest, even if it’s not reflected in on-chain registrations. For instance, BlackRock’s iShares Bitcoin Trust (IBIT) is reportedly generating more revenue than its flagship S&P 500 ETF (IVV). Such phenomena are quite rare.
Why can’t Bitcoin reach new heights?
Despite the growing ETF demand, Bitcoin prices are still under pressure.
Cryptoquant’s analysis shows that apparent demand for Bitcoin peaked around $1.6 million in January 2025, with ETF totals and strategy inflows doubling. At this point, ETF flows seem to have stabilized, yet current figures have dipped to negative territory, dropping to $857,000.
Essentially, the current inflows, even through ETFs, aren’t enough to counteract ongoing outflows. The market may require significant catalysts, like interest rate cuts, to spark renewed demand, a change that primarily benefits institutions and their clientele who are now central to the Bitcoin ecosystem.
Alexandre Schattackenko, Strategy Director at Paimium, a French crypto exchange, notes this shift:
“Ultimately, retailers are having to utilize traditional finance pathways. That’s something I’ve believed for a long time.”
However, he indicates that this doesn’t mean retail demand will completely vanish. Wealthy American investors might opt for exposure through firms like BlackRock, while retail participants in countries such as Nigeria and Argentina might continue to buy and hold Bitcoin directly.
So, perhaps direct retail demand is just lying low—not entirely extinguished. Under the right circumstances, it could resurface again.
