Bitcoin market structure has entered a new phase as US spot ETFs account for more than 5% of cumulative net inflows into Bitcoin assets.
According to Glassnode, the 12 funds have enabled financial institutions to become the world's largest marginal source of demand for digital assets. The company noted that this was discovered after matching Bitcoin post-ETF inflows with spot ETF founding funds.
Since its launch, net capital inflows into Bitcoin have totaled approximately $661 billion.
According to Glassnode data, 5.2% of this can be directly traced to coins acquired by US spot ETFs, which corresponds to the product's 6-7% share of circulating supply.
Considering this, Glassnode concluded that within two years of its launch, ETFs have reshaped the way Bitcoin is accessed, traded, and integrated into portfolios.
How ETFs Rewired Bitcoin’s Flow Dynamics
The introduction of regulated, intermediary-eligible Bitcoin exposure has resulted in a measurable change in liquidity behavior.
ETF trading volume has increased from approximately $1 billion per day at its inception to sustained levels of over $5 billion. In fact, the sector had a peak of more than $9 billion during a period of heightened volatility.
These trends are a structural feature of the market, particularly at inflection points, where ETF volume accelerates in the early stages of a rally and decelerates during corrections.
This pattern highlights the extent to which Wall Street volume relies on price discovery.
For context, BlackRock's IBIT fund alone generated $6.9 billion in sales during the record trading session following October's deleveraging event, highlighting how a single product can influence intraday liquidity and sentiment.
This shift marks a quiet transfer of market power from crypto-native exchanges to regulated intermediaries, a flow that increasingly sets the tempo of Bitcoin’s cycle.
Remarkably, the assets under management of these products tell a similar story. US-listed Bitcoin ETFs currently hold approximately 1.36 million BTC, with a total value of approximately $168 billion.
This represents nearly 7% of circulating supply, shifting exposure from self-custodial wallets to audited custodial vehicles that can be deployed at scale by financial advisors and asset managers.
This change changed the composition of long-term holders and brought Bitcoin deeper into institutional allocation frameworks.
A new organizational complex emerges
The rise of spot ETFs has also reshaped the derivatives landscape.
Bitcoin futures and perpetual swaps markets expanded in parallel with the increase in ETF exposure, with open interest on each exchange reaching a record $67.9 billion.
While Perpetual remains the preferred tool for crypto-native traders, the Chicago Mercantile Exchange (CME) has taken center stage in its institutional positioning. CME currently accounts for over $20.6 billion of open interest, or about 30% of the global total.
The strong correlation between CME open interest and US ETF assets is noteworthy.
Glassnode noted that institutional investors often combine ETF inflows with short futures positions to execute basis trading strategies, capturing yield through the spread between the spot and futures markets.
This creates a mutually reinforcing feedback loop of ETF demand, futures hedging, and yield strategies, creating a market structure that differs significantly from previous retail-driven cycles.
Effectively, ETFs have established a two-tier Bitcoin market.
While on-chain payments continue to underpin the asset's monetary policy and security model, off-chain financial products such as ETFs, CME futures, and brokerage accounts now mediate much of the trading volume and liquidity.
This organizational layer operates at scale and speed, with flows potentially exceeding those of the native spot exchanges that defined Bitcoin's early history.
Bitcoin activity moves off-chain
This shift towards storage and intermediation infrastructure is manifested in the behavior of networks.
Glassnode noted that the Active Entities Index, one of the most informative indicators of Bitcoin adoption, shows a structural decline in on-chain participation since the ETF's approval.
The number of unique entities traded each day decreased from about 240,000 to about 170,000, a level below the previous cycle's lows.
Volatility spikes still remain, but the underlying trend reflects a change in where Bitcoin is accessed.
Trades that were once done through on-chain transfers and exchange deposits are now done through ETF orders routed by broker-dealers.
Retail investors who previously engaged with Bitcoin through centralized exchanges are increasingly using intermediary platforms, and institutional investors are relying on ETF creation and redemption rather than native spot markets.
Therefore, a reduction in active entities does not mean weakening adoption, but rather a redistribution of activity to off-chain venues that dominate user interactions.
The new power center of the Bitcoin market
The cumulative effect of these changes is the emergence of institutions as the primary force behind Bitcoin's liquidity, flows, and price formation.
Spot ETFs have simplified exposure, integrated Bitcoin into traditional portfolio workflows, and created a market environment where Wall Street volume and CME positioning influence asset trajectories as much as crypto-native activity.
Bitcoin remains a decentralized monetary system, and its core consensus operates independently of these structures.
However, the mechanism by which most investors gain exposure has changed.
Currently, BTC ETFs hold a significant share of supply, influence marginal demand, and support the largest regulated liquidity pool the asset has ever had.
As a result, financial institutions can not only participate, but increasingly control the market structure of major digital assets.
