Shifting Dynamics: The Decline of Bitcoin Active Addresses Amid ETF Adoption

Bitcoin

With the recent launch of spot Bitcoin exchange-traded funds (ETFs), Bitcoin's on-chain activity has markedly decreased. While institutional investments in these products have surged, the number of active BTC addresses has seen a decline. As Wall Street becomes more involved with Bitcoin, the participation from everyday users appears to be undergoing noteworthy changes.

Key Takeaways:

Active Bitcoin addresses have been decreasing since the launch of spot ETFs in January 2024.
Institutional adoption has not led to increased retail participation; instead, retail investors seem fatigued.
Key figures in the market suggest a potential reversal in momentum due to favorable macroeconomic conditions.
Initiatives like RioSwap aim to enhance Bitcoin's utility in decentralized finance without losing its core principles.

The Fatigue of Retail Participation

For years, Bitcoin enthusiasts have championed the notion that Wall Street's involvement would spur a new era of widespread Bitcoin usage. However, the reality has been quite different, as the level of on-chain engagement has plummeted, signaling a loss of retail interest.

Financial analyst Jacob King noted that many retail investors were initially drawn to the ETFs due to fear of missing out (FOMO) but have since exited the market, leaving Bitcoin increasingly traded through intermediaries. He cautioned that ETF investing undermines the foundational principles of Bitcoin—where investors traditionally hold and manage their own assets, contrasting starkly with conventional banking practices. Ultimately, he believes that profit motives often overshadow ideological commitments.

Bitcoin
Active BTC addresses are still in decline | Source: Chart from Jacob King on X

Market analyst Crypto Seth has indicated that the net inflows into BlackRock and Fidelity’s spot Bitcoin ETFs have remained relatively low since October 10, following significant liquidation events. Nonetheless, he senses a potential momentum shift as the US stock market hovers just below new highs while retail sentiment is largely steeped in fear.

Seth also highlights a favorable macroeconomic landscape for Bitcoin. The Federal Reserve concluded its Quantitative Tightening (QT) program on December 1, 2025, following several years that removed nearly $3 trillion from its balance sheet since 2022. With interest rates remaining at 4.00%, cuts may soon follow, offering a more favorable environment for Bitcoin compared to Europe and China.

Intriguingly, BlackRock’s iShares Bitcoin Trust (IBIT) has emerged as the company’s most profitable ETF based on annual fee revenue, despite launching just under two years ago.

Moving Forward: Preserving Bitcoin’s Core Values

Bitcoin is experiencing important developments that enhance its ecosystem. In each market cycle that promises to broaden Bitcoin's reach into decentralized finance (DeFi), RioSwap is hailed as one of the few initiatives genuinely capable of achieving this without compromising decentralization.

Powered by Mintlayer’s unique HTLC architecture, RioSwap offers a decentralized exchange (DEX) that enables BTC to enter decentralized markets directly, without the need for wrapping or unbridging, putting full control back in the hands of the user. With the launch of the RioSwap testnet, Mintlayer aims to usher in a new phase of liquidity for BTC, facilitating its participation in decentralized markets on its own terms.

Bitcoin
BTC trading at $91,734 on the 1D chart | Source: BTCUSDT on Tradingview.com