Resilience of Institutional Investors in Bitcoin ETFs

Despite bitcoin’s recent volatility, analysts indicate that institutional investors are showing notable fortitude and commitment to their spot exchange-traded fund (ETF) holdings.

“Institutional investors are not fleeing from increased bitcoin volatility and are staying fairly stable and inclined to hodl,” said Bitwise Head of Research Europe, André Dragosch, to The Block.

Institutional Commitment

Dragosch highlighted data from the recent 13F filings for the second quarter of 2024, showcasing promising commitment from institutional investors towards bitcoin-based ETFs compared to other asset-class ETFs such as gold.

• In the first quarter of this year:
  • 44% of institutional investors raised their stakes in bitcoin ETFs.
  • 22% maintained their holdings.
  • 21% decreased their holdings.
  • 13% withdrew.

“Comparing that outcome to other ETFs, it’s really good,” Dragosch remarked.

Analysis of Institutional Resilience

Wintermute analysts observed similar resilience among institutional traders despite significant bitcoin market volatility.

“Despite the bitcoin price dropping by over 20% during the second quarter, these institutions did not flinch and continued to accumulate, underscoring the growing mainstream acceptance and institutional interest in bitcoin as an investment asset,” they noted.

Engagement from Hedge Funds

To illustrate the growing institutional engagement in bitcoin, Dragosch pointed out that over 60% of top global hedge funds are now holding bitcoin via ETFs. He emphasized that hedge funds are major players in the trading volume of spot bitcoin ETFs.

“Major hedge funds such as Millennium, Schonfeld, Boothbay, Capula, and others are among the leading holders of the majority of spot bitcoin exchange-traded funds (ETFs).”

He also mentioned that various family offices, institutional investors, and advisors are participating in this space.

“Seeing Millennium tucked up against the State of Wisconsin in these ETF filings is kind of great. I would like to see pensions and investment managers contribute an increasing portion over time,” he added.

According to a U.S. Security Exchange Commission filing from late June, the State of Wisconsin Investment Board holds 2,898,051 shares of spot bitcoin ETFs, revealing that the board no longer holds any position in Grayscale.