US-based Spot Bitcoin ETFs (Exchange-Traded Funds) began trading in January 2024, continuing to surge even after breaking records and setting the global ETF market. Recently, BlackRock’s iShares Bitcoin Trust (using The Chilter IBIT) has become the fastest ETF to reach $80 billion under management assets.
Naturally, the popularity and acceptance of Bitcoin ETFs appears to be changing the landscape of crypto investment. As recently revealed by prominent analysts on social media platform X, BTC investors appear to support a more traditional way of interacting with the world’s largest cryptocurrency.
Is Bitcoin ETF a departure from the BTC’s decentralization spirit?
In a July 18th post on X, Crypto analyst Willy Woo shared that growth rates for independent Bitcoin users have continued to decline over the past year. This growing development, due to Woo’s rising spot Bitcoin ETF, has led to the end of the 15-year trend.
This on-chain insight is based on GlassNode Entities Net Growth Metric, which measures the rate at which new users appear on the blockchain network per day (Bitcoin in this scenario). Woo revealed that this metric tracks not only addresses, but entities that point to a single controlled user that are forensically clustered addresses.
The net growth of an entity estimates the difference between a new entity and an “absorbing” entity (an entities with zero balances in previous timestamps that do not have zero balances). As observed in the chart below, this metric has been on a downward trend since 2023 and has deteriorated since Bitcoin ETF debuted in the US.
Source: @woonomic on X
This trend suggests that investors are increasingly choosing to enter the Bitcoin market through crypto products from institutions such as exchange trade funds, rather than buying directly into private crypto wallets. WOO was highlighted in X’s response to comments that this shift could lead to supply centralization.
Interestingly, this development has somewhat beaten the main spirit of Bitcoin, defined by Nakamoto Atoshi, which revolves around the construction of a decentralized financial system. However, Bitcoin ETFs are considered to be the gateway to crypto investment, primarily for older generations of people.
X’s Crypto Community Member:
ETFs were not stealing users from cold storage… They opened the market to people trapped behind the walls of compliance.
Bitcoin price at a glance
At the time of writing, BTC priced around $108,200, reflecting a 0.4% increase over the past 24 hours.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured Images Created by Dall.E, TradingView Chart
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