Bitcoin Retail On-Chain Activity Hits Record Low, Signaling Possible Shift to ETFs

Retail investors’ on-chain activity in the Bitcoin market has fallen to its lowest level on record, according to a CryptoQuant analysis.

CryptoQuant contributor Darkfost wrote on May 17 that retail BTC deposit flows to Binance are now “essentially at historic lows,” describing that as a sign that Bitcoin’s market structure is gradually changing.

Darkfost defined retail investors as holders of less than 1 BTC. Under that measure, the monthly average of retail Bitcoin deposits on Binance has dropped to about 314 BTC.

That is far below levels seen in previous cycles. Retail deposit volumes rose to about 5,400 BTC in 2018 and about 2,600 BTC in 2021.

In the current cycle, retail deposits were about 1,800 BTC during the bear market and about 1,200 BTC at the first peak in March 2024. They have declined steadily since then.

Retail deposit volumes were about 1,000 BTC in January 2024 and have now fallen to less than one-third of that level.

“Retail participation has continued to decline over time,” Darkfost wrote. “It looks as if this group is gradually disappearing from observable on-chain activity.”

He cited a possible shift into spot Bitcoin exchange-traded funds as one factor behind the trend.

Some investors may have left the market or moved to indirect exposure through spot Bitcoin ETFs instead of holding Bitcoin directly, he wrote.

Retail investors are now less active than ever before, he added. That is a clear sign that as the Bitcoin market evolves, investor composition and behavior are also being reshaped.