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Home»Bitcoin»What happened to Bitcoin’s retail? Take a look offchain

What happened to Bitcoin’s retail? Take a look offchain

Bitcoin By Gavin04/07/2025
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Where Did Bitcoin’s Retail Go? Look Offchain
Where Did Bitcoin’s Retail Go? Look Offchain
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The key takeaways:

  • While retail investors appear to be sleeping, the ETFs AUM continues to grow

  • Retail investors hold the majority of spot Bitcoin ETF shares—either directly or indirectly through investment advisers and hedge funds acting on their behalf.

  • Even though the demand for direct retail investors is waning, it’s not completely dead. This holds true outside of America, as self-custody continues to be essential.

Bitcoin (BTC), as a currency, is often assumed to be unable to move up because retail investor Demand is dwindling. This narrative is supported by Onchain’s data: activity in small wallets has been at an all-time low for several years. This is not the complete picture.

Retail may still be around, but not in the places we once thought. TradFi may have a large part of the retail market this cycle: pension funds, brokerage accounts, spot ETFs. It may affect the way Bitcoin is perceived if retail ETFs were counted.

Who buys the Bitcoin ETFs on spot?

Bitcoin is now in many clients’ portfolios who may not have owned it before due to lack of confidence in technical matters or unwillingness of self-management.

ETFs are also popular with institutions because of their ease and clarity in accounting. Investment advisors and hedge fund managers are among the largest ETF investors, managing Bitcoin exposure for both corporate and retail clients. In addition, banks, pension funds, insurance companies, and insurers are stepping up to the plate, offering their clients exposure as well.

Bitcoin is now worth approximately $135 Billion to ETF holders collectively.

Bitcoin ETFs Assets Under Management. Source: CoinGlass

Bloomberg Analyst Eric Balchunas, investment advisers account for nearly half of the $21 billion in assets reported through 13F filings—a growing subset of total ETF exposure that now represents around 20% of all ETF holdings. The next largest holders of ETFs are hedge funds, with a total value of $6.9 Billion (about 83.934 BTC). Brokerages and holding companies follow closely behind.

The top BTC ETF investors by category. Source: Bloomberg Intelligence

CoinShares report Adds some color: Goldman Sachs is the leader among financial advisors, with $1.8billion invested. Millennium Management leads hedge funds at $1.6billion.

Source: CoinShares, Q1 2020. CoinShares

In a sense, ETFs can be considered retail products.

In contrast to the image we are used to of small wallets stacked with sats, it’s easy to think that ETF flows are purely institutional. From that lens, yes—direct retail demand has all but disappeared..

As André Dragosch, the head of research of Bitwise, said to Cointelegraph, 

“Retail has been the major distributor of Bitcoin in 2025 so far, based on our calculations. Meanwhile, both public corporations as well as funds and ETPs have been the biggest source of demand for Bitcoin in 2025.”

Dragosch also added

“It is certainly true that retail participation is also heavily expressed via ETPs/ETFs since these investment vehicles remain heavily retail-dominated. This is evident in the most recent 13F filings in the US which still indicate that the percentage of retail investors in US spot Bitcoin ETFs is close to 75%.”

If the retail client is holding a BTC ETF, then it is time to re-evaluate how data from onchain is being interpreted. The new Bitcoin reality may be this: retail clients prefer to hold their Bitcoin in a brokerage, not an account under self-custody. This approach is contrary to Bitcoin’s origins, but it appeals to those who still believe in the investment thesis.

Retail interest is evident in the success of ETFs, even though it may not register onchain. BlackRock’s iShares Bitcoin Trust (IBIT) has already generated more revenue than its flagship S&P 500 ETF (IVV), according to Bloomberg—hardly a niche phenomenon.

Related: Why can’t Bitcoin price break $112K all-time highs? BTC analysts explain

Why is Bitcoin not reaching new heights?

Bitcoins’ price is still under pressure despite the ETF.

CryptoQuant’s graph As an example, Bitcoin’s demand in 2025 peaked near $1.6m, which is twice the total ETF inflows. With ETF inflows steady today, this figure is now negative, falling to -$857,000.

BTC apparent demand. CryptoQuant

In other words, current inflows—even with ETFs—aren’t enough to offset the ongoing outflows. It’s possible that the market needs a big catalyst. interest rate cuts, to reignite demand. This trigger will primarily benefit the institutions and clients who are now playing a central role in Bitcoin’s ecosystem. 

Alexandre Stachtchenko acknowledges the shift in strategy at Paymium.

“Eventually, retail will have to go through the TradFi rails, it is my long-standing conviction.” 

He clarifies that this does not mean the direct demand from retail will disappear. Although wealthy US investors will opt to get exposure through BlackRock and other peers, retailers in Nigeria and Argentina are likely to continue buying and holding BTC.

So perhaps direct retail demand hasn’t disappeared—just gone quiet. It could still return under the right conditions.

The article does not provide legal advice or investment recommendations and it is intended only for informational purposes. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.