The strong initial performance of Bitcoin ETFs appears to be predominantly fueled by retail investors.

Data indicates that the predominant demand for spot bitcoin ETFs, particularly the largest one, BlackRock’s IBIT, originates from retail investors, with the average trade size hovering around $13,000.

Billions of dollars have poured into spot bitcoin exchange-traded funds since their launch in January, coinciding with a positive shift in sentiment toward the cryptocurrency. However, contrary to expectations, much of this investment influx is not from institutional players but rather from individual retail investors.

According to Bloomberg Intelligence senior ETF analyst Eric Balchunas, the iShares Bitcoin Trust (IBIT) from BlackRock is witnessing an average of 250,000 trades per day, with an average trade size of 326 shares, equating to roughly $13,000. This suggests a significant presence of nonprofessional investors in the market.

While BlackRock declined to comment, sources familiar with the matter reveal that although the asset manager is witnessing buying interest from various types of customers, including both retail and institutional investors, the majority of the capital inflow appears to be driven by retail participants.

Despite the 326-share average trade size potentially being split into smaller chunks for processing efficiency, Balchunas asserts that issuers have confirmed that retail demand is indeed a significant driving force behind the activity in spot bitcoin ETFs.

VanEck, which introduced the VanEck Bitcoin Trust (HODL) alongside other spot bitcoin ETFs in January, concurs with this assessment. Kyle DaCruz, director of digital assets products at VanEck, notes that while there is a considerable retail presence, there is limited transparency into the identities of early ETF investors, as many trades are executed by authorized participants, market makers, and brokers acting on behalf of entities.

ETFs offer a convenient avenue for individual investors to gain exposure to bitcoin without directly owning the asset, enabling them to invest through financial advisers or brokerage accounts. BlackRock’s IBIT, with over $14 billion in assets within two months, stands out as a leader among bitcoin ETFs, leveraging its high liquidity, low fees, and reputable brand to appeal to a wide range of investors.

Despite a notable outflow from Grayscale’s GBTC, which transitioned into an ETF in January, the overall performance of bitcoin ETFs has been impressive. Balchunas highlights that even with the low fees associated with most bitcoin ETFs, they require around $80 million to $100 million in assets to break even, with WisdomTree’s Bitcoin Fund (BTCW), the smallest among them, currently holding approximately $70 million.