Bitcoin ETFs Are Booming—But Self-Custody Growth Just Broke 15-Year Streak

Source Bitcoinist

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.

Are Bitcoin ETFs A Deviation From BTC’s Decentralization Ethos?

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.

Bitcoin ETFs

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.

Bitcoin Price At A Glance

As of this writing, the price of BTC stands at around $108,200, reflecting a 0.4% increase in the past 24 hours.

Bitcoin ETFs

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Ethereum Price Forecast: ETF inflows blow past $4 billion as whales accumulate 1.44 million ETH in AugustEthereum (ETH) remained muted near $4,500 on Thursday despite sustained accumulation from institutional investors and whales over the past few days.
Author  FXStreet
Aug 29, Fri
Ethereum (ETH) remained muted near $4,500 on Thursday despite sustained accumulation from institutional investors and whales over the past few days.
placeholder
Cardano Price Forecast: ADA finds support as network growth fuels bullish outlookCardano (ADA) shows signs of recovery, trading around $0.85 on Friday after finding support around its previously broken trendline earlier this week.
Author  FXStreet
Aug 29, Fri
Cardano (ADA) shows signs of recovery, trading around $0.85 on Friday after finding support around its previously broken trendline earlier this week.
placeholder
US core PCE inflation set to rise 2.9% YoY in July amid rising bets of Fed rate cut in SeptemberThe United States Bureau of Economic Analysis (BEA) will publish the Personal Consumption Expenditures (PCE) Price Index data for July on Friday at 12:30 GMT. 
Author  FXStreet
Aug 29, Fri
The United States Bureau of Economic Analysis (BEA) will publish the Personal Consumption Expenditures (PCE) Price Index data for July on Friday at 12:30 GMT. 
placeholder
Solana Price Hits 6-Month High, Unbothered By $432 Million SellingSolana has surged to a six-month high, continuing its strong uptrend in the broader crypto market.
Author  Beincrypto
Aug 29, Fri
Solana has surged to a six-month high, continuing its strong uptrend in the broader crypto market.
placeholder
Forex Today: US Dollar stabilizes ahead of key PCE inflation dataThe US Dollar (USD) finds a foothold early Friday after posting losses for three consecutive days.
Author  FXStreet
Aug 29, Fri
The US Dollar (USD) finds a foothold early Friday after posting losses for three consecutive days.
goTop
quote