U.S.-based exchange-traded funds (ETFs) have crossed the $1 trillion mark this month, 3 months faster than last year. According to State Street Investment Management, this puts inflows on pace to hit $1.4 trillion by the turn of the year. The record inflows followed the October 2025 price surge, which saw the Bitcoin price climb past $125,000.
Spot Bitcoin ETFs have also seen significant outflows in the last few days. On Monday, funds recorded over $326 million in redemptions as the market experienced over $500 billion in liquidations triggered by US-China trade tensions.
“Any market correction might slow the pace, but it wouldn’t halt the trend,” said Matthew Bartolini, global head of research strategists at State Street.
It’s a sentiment echoed by Matt Hougan, Chief Investment Officer at Bitwise Asset Management. “From where I sit, the stars are aligned for a very strong Q4 for flows—more than enough to push us to a new record and a new all-time high in Bitcoin price,” he said. His company is on track for a $30 billion inflow year, which, according to him, was “unthinkable just two years ago.”
Institutional Demand Leads the Charge
A quick look at the inflows shows that institutions are powering the rally. BlackRock’s iShares Bitcoin Trust (IBIT) absorbed $970 million in a single day on October 6, making it one of the largest inflows for any U.S. Bitcoin ETF. Across the same week, IBIT accounted for over 75% of total ETF inflows.
BlackRock CEO Larry Fink suggested that client demand for digital exposure continues to grow. His comment marked a symbolic reversal for one of Wall Street’s most influential figures and an endorsement of Bitcoin’s evolving legitimacy.
Overall, assets in US Bitcoin ETFs stood at $153 billion as of October 15, representing 6.4% of Bitcoin’s total market cap.
Demand from institutional investors is expected to rise after President Trump signed into law legislation creating a regulatory framework for U.S.-dollar-pegged stablecoins. This has simplified entry and made tax reporting and compliance less cumbersome.
Additionally, earlier this year, the SEC eliminated SAB 121 guidance, which required banks to classify customer-owned crypto as liabilities. This has made more institutional investors warm up to Bitcoin ETFs, and after another record-breaking quarter for crypto, the trend is only set to continue.
A Wider Choice for Investors
With more and more companies offering spot Bitcoin ETFs, investors can now enjoy more options. While some, like IBIT and Fidelity’s FBTC, continue to post consistent inflows, legacy vehicles like Grayscale’s GBTC have seen redemptions as investors rotate into more attractive alternatives.
As the market dropped on October 10, U.S. spot Bitcoin ETFs collectively recorded a net outflow of $4.5 million, driven by GBTC and Bitwise’s BITB, even as IBIT alone posted $74 million in net inflows.
Investors aren’t just picking the first Bitcoin ETF they come across, and many are rotating between products. BlackRock’s IBIT’s immense popularity right now can be attributed to its liquidity and reputability, thanks to its large AUM.
Another key consideration investors are making is cost-effectiveness. The less you pay, the more you keep, and many legacy Bitcoin ETFs no longer offer fee waivers, making them less attractive to investors.
Global Retail Investors Still on the Sidelines
Despite Bitcoin ETFs becoming more mainstream, smaller investors have yet to return in large numbers. But this could change if Bitcoin hits the price highs of early this month and continues attracting mainstream headlines.
So far, none of that has happened despite the October price surge. Google search interest remains at the same level as in 2022, when cryptocurrency was in a downward spiral.
Institutional investors increased their Bitcoin ETF holdings by a staggering 64,983 BTC in Q2. This was a considerable change from Q1 2025, when institutions took out 38,155 BTC even as other holders increased their exposure.
Now, institutions account for roughly one-quarter of US spot Bitcoin ETF assets, and the share is expected to increase once the 13F filings become available.
But not everyone thinks retail investors are cooling on spot Bitcoin ETFs. “The explanation reveals not an exodus, but an expansion,” says Andre Dragosch, the head of research at Bitwise.
“It is certainly true that retail participation is also heavily expressed via ETPs/ETFs since these investment vehicles remain heavily retail-dominated. This is evident in the most recent 13F filings in the US, which still indicate that the percentage of retail investors in US spot Bitcoin ETFs is close to 75%,” he added.
Global retail inflows tend to lag institutional ones, arriving as confidence builds and fear of missing out (FOMO) takes hold. Still, the recent trend means retail traders will continue to lag behind large, regulated players at least for the next few quarters.
Balancing Optimism with Risk
Just a few days ago, inflows dominated headlines with Bitcoin achieving its highest price yet. But today, the stories are all about the large outflows from Bitcoin ETFs.
While many investors are optimistic about the future, thanks in part to a more crypto-friendly environment and an avalanche of institutional investors, the latest pullback shows there is still some risk to contend with.
While the latest redemptions were triggered by a threat of 100% tariffs on China by President Trump, other macro conditions, like a stronger U.S. dollar or changes in SEC policy, could all trigger profit-taking among institutions.
A New Phase for Bitcoin ETFs
For the first time, the dominant demand driver for spot Bitcoin ETFs is not speculative retail trading but steady institutional allocation. This change may make future cycles less explosive but potentially more durable.
This new dynamic was evident over the last few days as Bitcoin surged to $115,000 after last week’s market crash. Whether inflows from retail investors catch up or not, institutions are now the ones setting the tempo.
