Banks, Hedge Funds, Pensions Buying Spot Bitcoin ETFs

Banks, Hedge Funds, Retirement Investments Buying Spot Bitcoin ETFs

Hedge funds, pension funds and major banks were among buyers of spot bitcoin ETFs in the first quarter, according to filings and published reports, adding momentum to the idea that demand for the new funds is widespread among investors of all types.

At the same time, flows into spot bitcoin exchange-traded funds increased this week, reversing last week’s outflows.

Major New York bank Morgan Stanley, which does not issue a crypto fund among 14 U.S. ETFs, bought about $270 million of the $18.8 billion Grayscale Bitcoin Trust ETF (GBTC), according to a quarterly filing. Investors have withdrawn more than $17 billion from the fund since spot bitcoin ETFs began trading in January due to management fees, the highest among its 10 rivals. GBTC remains the largest spot Bitcoin ETF, ahead of BlackRock’s $17.9 billion iShares Bitcoin Trust (IBIT).

Banks, Hedge Funds, Retirement Investments Buy Spot Bitcoin ETFs

Hedge funds including Steven Cohen’s Point72 Asset Management, Paul Singer’s Elliott Investment Management and Israeli UK-run Millennium Management also bought spot bitcoin ETFs, Bloomberg News reported. Market makers such as Ken Griffith’s Citadel Securities and dealer Susquehanna International Group purchased the funds in the first quarter, the story said. Bitcoin magazine said Susquehanna holds $1.8 billion worth of GBTC.

“Big banks are likely holding ETFs on behalf of their clients, while hedge funds are likely making directional bets on bitcoin,” said Etf.com Senior Analyst Sumit Roy. “Crypto is a large asset class worth approximately $2.5 trillion; “It is no surprise to see institutional investors getting involved, especially now that spot Bitcoin ETFs are available.”

It is not clear whether the bets won or lost money in the applications, which do not specify the date of purchase of the securities. 13F documents are filed after quarter end and provide the approximate number and value of shares as well as other information such as puts and options. Bloomberg reported that nearly 1,000 firms reported owning the ETF.

Pension funds, which generally take a conservative approach to investing, purchased the funds in the first quarter, a handful of publications reported. Among them was the Wisconsin State Board of Investment.

Spot bitcoin ETFs received $642 million in new inflows last week, reversing recent outflows, according to Bloomberg data. Investors withdrew $112 million from the fund late last week. The inflows occurred during a week in which the Bitcoin price increased by around 10%.

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