Bitwise Bitcoin ETF: Bull Market Still Running On One Engine

Summary Institutional flows via spot Bitcoin ETFs are driving the current Bitcoin market rally, with BITB and others seeing sustained inflows despite recent price consolidation. Retail participation remains muted, as seen in declining spot exchange volumes and high Bitcoin dominance, suggesting we’re still early in the bull cycle. BITB offers asymmetric upside, providing direct exposure to Bitcoin’s spot price with institutional tailwinds now and retail momentum still to come. It’s been ~18 months since the spot Bitcoin ETFs began trading, and at this juncture, most investors have moved beyond the granular details in their preference for a specific ETF to gain direct exposure to Bitcoin ( BTC-USD ). The ETFs all offer similar structure and tracking accuracy, save for Grayscale Bitcoin Trust ETF ( GBTC ), which has maintained a higher 1.5% expense ratio. We’re also now past the early marketing incentives, like the six-month fee waiver on some of the ETFs. Personally, I favor the Bitwise Bitcoin ETF (NYSEARCA: BITB ) as my preferred vehicle because of the fund’s alignment with the broader Bitcoin development ethos; they donate 10% of their profits to open-source Bitcoin development. Bitwise was also the first fund manager to publish the Bitcoin addresses for its ETF holdings. Investors can track the inflows and outflows of the actual BTC in the fund in real-time, using the addresses. This week, Bitwise retired the approach of verifying the ETF’s BTC holdings via the published addresses and has introduced a more robust and institutional-grade framework for verifying the fund’s on-chain reserves and financial integrity through a third-party proof-of-reserves system, verified daily by a U.S.-based licensed CPA firm. Instead of just listing on-chain BTC holdings, this new verification method reconciles on-chain holdings with the ETFs’ outstanding shares and will soon include CPA-attested reports that verify both assets and liabilities, thereby delivering a more comprehensive and investor-friendly form of transparency. Think of this in a similar vein to the independent audit performed on companies prior to a 10-Q or 10-K filing, but the scope here is limited to on-chain digital asset balances and ETF share liabilities. And the verification happens daily. With the latest updates on BITB and their proof-of-reserves verification already mentioned, the truth is, there’s not much left to say about the structure of spot Bitcoin ETFs themselves that hasn’t already been covered by analysts here on Seeking Alpha. The products are now largely standardized – same underlying asset, similar tracking, fees narrowing, and with early incentives fading. I believe the questions now on most investors’ minds would be whether Bitcoin’s momentum sustains, navigating macro headwinds and their potential impact on Bitcoin and its related assets, and the profit-taking strategies at BTC’s all-time highs. For most investors, it is now much less about which specific spot Bitcoin ETF to choose and more about how the underlying asset performs and how to position to maximize returns. BITB vs BTC price trend on a YTD basis (Seeking Alpha) With the spot Bitcoin ETFs’ underlying asset, Bitcoin, showing momentum lately, the ETFs have naturally followed the price action of Bitcoin. The spot Bitcoin ETFs themselves have been an immense catalyst that has made Bitcoin more mainstream this past year, and recently broke a new all-time high just above $121,000 . Since the April Liberation Day tariffs sell-offs when BTC dipped below $80,000, the spot Bitcoin ETFs have added over $6 billion in inflows. The spot ETFs now hold a total of ~1.28 million BTC or about 6% of Bitcoin’s total 21 million supply, bringing total assets under management [AuM] for the total ETFs to a staggering $154 billion (as of July 17, 2025). Since the launch of the spot ETFs, Bitcoin has seen accelerated comebacks after every price dip. Every dip has been followed by an uptrend that breaks the previous all-time high; basically, higher highs and higher lows. TheBlock The interest in the spot Bitcoin ETFs has been increasingly institutional – the trade volumes of the spot Bitcoin ETFs and the increasing adoption of Bitcoin treasury strategy among publicly-traded companies prove this institutional interest. The cumulative trade volume since the spot Bitcoin ETF launched now surpasses $1 trillion (shown in the preceding chart). And for the first half of this year, spot Bitcoin ETFs nearly matched about 40% of the net inflows into physically backed gold ETFs. Which is impressive, considering the spot Bitcoin ETFs launched less than two years ago. Physically-backed gold ETFs recorded $38 billion in inflows in H1, while the physically-backed Bitcoin ETFs (ditto the spot Bitcoin ETFs) have seen $14.83 billion in net inflows so far this year, already flipping its own 2024’s net inflows (see the chart below). As both the gold and the Bitcoin flows data show, digital gold (Bitcoin) is gaining ground and competing strongly with physical gold. 2024 cumulative net inflows vs 2025 YTD cumulative net inflows (CryptoQuant) Having highlighted these data points that show Bitcoin’s institutional appeal and structural maturity as a mainstream asset, let’s go back to the more pressing question for most retail investors at the moment, who make up a great number of the readership here and for the broader retail cohort: how much longer can BTC’s momentum sustain before retail FOMO kicks in and accelerates price discovery even further? I believe retail participation has always been pivotal for the peak of Bitcoin market cycles, as retail trades typically make up much of the final wave of market momentum, before an inevitable drawdown or price correction. In the current cycle, the late-stage retail buyers (the so-called “dumb money”) have mostly been sidelined so far (as I’ll show from some data), and this absence of broader retail euphoria suggests that the final leg of the bull run is still ahead. I think it is too early to call a cycle top. In Bitcoin’s cycles, historically, retail FOMO tends to accelerate price discovery dramatically toward the cycle top. Therefore, positioning before this general retail FOMO has always been one of the most effective strategies to capture outsized gains from Bitcoin bull markets. How Has Retail Been Sidelined in the Current Bitcoin Market Cycle In the past, the price trend of Bitcoin has closely mirrored the volume trend of retail trades on crypto exchanges. That price/volume relationship has been noticeably weaker since the launch of the spot Bitcoin ETFs. Notice from the chart below how since early 2024 (time of the spot ETFs launch), Bitcoin price has decoupled from retail-driven BTC trade volume on crypto exchanges. And it has been more pronounced lately – as BTC rose above $100k, retail volume took an inverse trajectory (as seen in the chart below). Bitcoin price vs spot volume trend (Bitcoinity) Meanwhile, the spot ETF flows and volume have been directly influencing Bitcoin spot price. As shown in the next chart, there’s a clear visual correlation between periods of sustained positive inflows (green bars) and rising Bitcoin prices, and periods of sustained outflows (red bars) and falling Bitcoin prices. Bitcoin price vs spot ETFs new flows (SoSoValue) Now, the essence of these two comparisons in this piece – showing waning retail activity vs BTC price correlation with the spot ETF flows – is to highlight the thesis that the market still has room to run. The next big question is timing when retail re-enters in full force. I’d say there is no analysis that would definitely pinpoint that timing, but based on historical patterns and market psychology, retail typically piles in late in a bull cycle – once price is already well into price discovery, then the media is flooded with back-to-back headlines of fresh all-time high price (the “Bitcoin is going to $1 million” type frenzy), and anecdotal FOMO is everywhere. The current sentiment backdrop hasn’t shown any of these yet. The spot volumes on crypto exchanges I already mentioned, and Google Trends data for Bitcoin search terms, suggest retail is still sidelined. And further on-chain data shows that the retail trade hasn’t been going into altcoins either, as some investors may speculate; Bitcoin dominance still remains elevated above 62%. Even Ethereum’s ( ETH-USD ) surge over $3,000 since Tuesday (July 15) has been primarily linked to institutional flows into the spot Ethereum ETFs. The spot Ethereum ETFs saw record daily net inflows of ~$726 million . Bitcoin dominance (TradingView) My goal in this piece is to make investors understand that the retail frenzy, which typically marks the later stages of a crypto bull cycle, hasn’t arrived yet (as data shown throughout this article have shown). This means Bitcoin still likely has room to run, especially if this early momentum driven by institutional flows continues and draws more attention from mainstream media, thereby giving retail that psychological green light for an entry. Until then, institutional capital will keep driving the trend. But when retail does finally flood in, history suggests it won’t be a subtle entry; it’ll most likely come with euphoric headlines, parabolic price moves, and a FOMO that feeds on itself. We’re not there yet, and that’s exactly where the opportunity lies. Investors should bear in mind that the spot Bitcoin ETFs’ share prices are directly impacted by the underlying Bitcoin spot price, and with Bitcoin being an inherently volatile asset, the spot ETF shares also carry significant potential for volatility. In the near term, let’s not also forget the potential for a tariff-driven macro shakeup, as the August 1 deadline for President Trump’s reciprocal trade tariffs draws closer. I’ll close this piece with this simile: the Bitcoin bull market is like a twin-engine jet. At the moment, it’s flying on just one engine, which is institutional flows. The other engine – retail participation – hasn’t powered on yet. But when it does, that’s when things really take off.

Source: Seeking Alpha