The US-based spot Bitcoin ETFs (exchange-traded funds) have continued to soar after they started trading in January 2024, breaking and setting records in the global ETF market. Recently, BlackRock’s iShares Bitcoin Trust (with the ticker IBIT) became the fastest ETF to hit $80 billion in assets under management.
Unsurprisingly, the growing popularity and acceptance of Bitcoin ETFs appear to be shifting the crypto investment landscape. As recently revealed by a prominent analyst on the social media platform X, BTC investors seem to be favoring a more traditional way to interact with the world’s largest cryptocurrency.
In a July 18 post on X, crypto analyst Willy Woo shared that the growth rate of self-custody Bitcoin users has continued to fall over the past year. This growing development, which Woo attributed to the ascent of the spot Bitcoin ETFs, has led to the end of a 15-year trend.
This on-chain insight is based on the Glassnode Entities Net Growth metric, which measures the rate at which new users are coming onto a blockchain network per day (Bitcoin, in this scenario). Woo clarified that this metric does not just track addresses but entities, which refer to addresses forensically clustered together into single controlling users.
The Entities Net Growth estimates the difference between new entities and “disappearing” entities (entities with a zero balance that had a non–zero balance at the previous timestamp). As observed in the chart below, this metric has been on a downward trend since 2023, which has worsened since the Bitcoin ETFs debuted in the US.
Source: @woonomic on X
This trend suggests that investors are increasingly choosing to enter the Bitcoin market through institutional crypto products like exchange-traded funds rather than by purchasing directly into private crypto wallets. Woo highlighted in a response to a comment on X that this shift could lead to a centralization of the supply.
Interestingly, this development somewhat defeats the primary ethos of Bitcoin as defined by Satoshi Nakamoto, which revolves around building a decentralized financial system. However, the belief is that the Bitcoin ETFs are a gateway to crypto investments for people—primarily the older generation—who can’t easily access them via the typical route (self-custody wallets).
A crypto community member on X:
ETFs didn’t steal users from cold storage… They opened the market to those who were locked behind compliance walls.
As of this writing, the price of BTC stands at around $108,200, reflecting a 0.4% increase in the past 24 hours.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image created by DALL.E, chart from TradingView
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