Bitcoin ETFs are increasingly being held by hedge funds, mutual funds and other institutional investors, easing concerns that the cryptocurrency asset would remain a fringe investment, a recent survey found.
The number of institutional investors holding bitcoin ETFs rose 14% in the second quarter, to 1,110 from 965, according to recent data from asset manager Bitwise Asset Management. The exchange-traded funds reached more big firms despite a 12% drop in bitcoin’s price during the second quarter of 2024.
Bitcoin ETF assets soared in popularity after the Securities and Exchange Commission in January approved the trading of so-called spot bitcoin ETFs. Those funds own the cryptocurrency, while previous bitcoin funds held futures.
The large investing firms now account for 21% of total assets under management in bitcoin ETFs, up from 19% in the previous quarter, the survey found. Institutions held $11 billion in bitcoin ETFs at the end of the second-quarter, further demonstrating growing confidence in the new products.
“If institutions will buy bitcoin when prices are volatile, imagine what could happen in a bull market,” Matt Hougan, Bitwise chief investment officer and a member of etf.com’s editorial advisory board, wrote in the study.
Room to Grow: Bitcoin ETF Holdings
The report, compiled from 13F filings and Bloomberg data, suggests that the bitcoin ETF market is barely tapped by the big investing firms. It said that institutional investors that reported holding bitcoin ETFs have about one-half of one percent of their assets in bitcoin. Hougan wrote that he expects that number will cross 1% within a year “and keep rising from there.”
He also wrote that bitcoin ETFs have been adopted by institutions “at the fastest rate of any ETF in history,” challenging the notion that bitcoin ETFs are predominantly owned by retail investors.
This rapid adoption suggests a shifting landscape in cryptocurrency investment, with professional investors increasingly viewing bitcoin ETFs as a viable asset class.
The trend of institutional adoption is further evidenced by recent disclosures from major financial players. Goldman Sachs Group Inc. said in a recent U.S. Securities and Exchange Commission filing that it held positions in seven out of the 11 bitcoin ETFs available in the U.S., totaling about $418.6 million as of June 30.
Goldman’s largest position is in the iShares Bitcoin Trust (IBIT), valued at $238.6 million, followed by Fidelity Wise Origin Bitcoin Fund (FBTC) at $79.5 million and Invesco Galaxy Bitcoin ETF (BTCO) at $56.1 million.
Bitwise anticipates that bitcoin ETF inflows will continue to grow, with expectations for larger inflows in 2025 compared to 2024, and even more substantial growth in 2026.
“The institutions are coming, and they’re coming in size,” the report concluded.
This institutional interest comes at a time when the broader cryptocurrency market has seen increased activity. The 11 spot bitcoin ETFs that began trading earlier this year have generated $17.5 billion in inflows, according to U.K. asset manager Farside Investors.
