Binance Report: Bitcoin ETFs Surge Among Top Funds as Correlation with S&P 500 Grows

Adoption Binance Bitcoin ETFs

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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October 25, 2024

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Retail investors have emerged as the dominant force behind the demand for spot Bitcoin exchange-traded funds (ETFs), according to new research from crypto exchange Binance.

The October 25 report revealed that non-institutional investors accounted for nearly 80% of the total assets under management (AUM) in these ETFs as of October 10, 2024.

Since their launch in January 2024, spot Bitcoin ETFs have witnessed a remarkable $21.6 billion in net inflows.

A Huge Portion of Spot Bitcoin ETFs AUM Did Not Come From New Investors

The Binance report revealed that a substantial portion of the $63.3 billion AUM amassed by spot Bitcoin ETFs since their launch in January did not stem from fresh investments pouring into the crypto realm.

Rather, this capital influx appears to be driven by retail investors reallocating their holdings from digital wallets and centralized exchanges into these funds, attracted by the enhanced regulatory safeguards they offer.

Spot ETFs are serving dual roles,” Binance noted in its report.

“They are not only onboarding new investors but also attracting existing crypto holders who value the regulated structure of ETFs.”

The shift suggests that ETFs provide a more accessible and secure entry point for individuals who may have previously held their Bitcoin through other channels.

While retail investors remain the primary drivers of growth in Bitcoin ETFs, Binance’s report also noted increasing interest from institutional investors.

Investment advisers and hedge funds have emerged as the fastest-growing categories of institutional participants in the market.

Despite this, the overall institutional demand for Bitcoin funds remains limited, with many large financial firms remaining cautious.

For instance, U.S. investment giant Vanguard has maintained its anti-crypto stance, repeatedly refusing to launch any Bitcoin or crypto ETFs.

Vanguard’s new CEO, Salim Ramji, reiterated this position in August 2024, stating that the company has no plans to enter the crypto ETF space.

The cautious approach reflects the broader hesitation among traditional financial institutions to fully embrace cryptocurrencies, despite the growing demand.

Market Volatility Solws Pace of Adoption

While institutional investment in Bitcoin ETFs is expected to increase gradually, market volatility and uncertain global liquidity conditions have slowed the pace of adoption.

The recent influx of capital into Bitcoin ETFs has been notable, with Binance highlighting an unusually large streak of inflows in recent weeks.

Between October 11 and 23, these ETFs attracted $2.88 billion in new capital, with just one day of outflows amounting to $79.1 million.

Last week, the broader digital asset investment market showed signs of renewed optimism, with $2.2 billion in inflows for the week, the largest increase since July.

The uptick in investor sentiment is attributed to expectations of a Republican victory in the upcoming U.S. elections, which could be seen as more favorable for digital assets.

Bitcoin remained the primary driver of these inflows, securing $2.13 billion, while short Bitcoin products also saw notable inflows of $12 million, the largest since March.