Retail Bitcoin On-Chain Activity Hits Record Low as Investors May Shift to ETFs

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

CryptoQuant contributor Darkfost wrote on May 17 that retail Bitcoin deposit flows to Binance are now "effectively at historical lows," signaling a gradual shift in the market's structure.

Darkfost defined retail investors as holders of less than 1 BTC. Based on that definition, the monthly average of retail BTC deposits on Binance has fallen to about 314 BTC.

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

In the current cycle, retail deposits reached about 1,800 BTC during the bear market and about 1,200 BTC at the first peak in March 2024. They have continued to decline since then.

Retail investor deposits stood at about 1,000 BTC in January 2024. They have now dropped to less than one-third of that level.

Retail participation has steadily declined over time. Darkfost said the group appears to be gradually disappearing from observable on-chain activity.

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

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

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