Institutional investors holding steady on bitcoin despite market volatility, analysts say
Quick Take
- Institutional investors are more inclined to maintain their bitcoin holdings even amid increased volatility, according to analysts.
- Over 60% of leading global hedge funds are now investing in bitcoin via ETFs, highlighting growing institutional interest.
Despite bitcoin's recent volatility, analysts have indicated that institutional investors are demonstrating 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," Bitwise Head of Research Europe André Dragosch told The Block.
Dragosch highlighted data from the recent 13F filings for the second quarter of 2024, which, he noted, showed promising commitment from institutional investors towards bitcoin-based ETFs compared to other asset-class ETFs, such as gold.
"Of the institutional investors who made an allocation into spot bitcoin ETFs in the first quarter of this year, the majority either held more shares this spring or purchased more of them. Of the first quarter registrants, 44% raised, 22% maintained stable, 21% dropped, and 13% withdrew their stake in bitcoin ETFs in the second quarter. Comparing that outcome to other ETFs, it's really good," Dragosch said.
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, further underscoring the growing mainstream acceptance and institutional interest in bitcoin as an investment asset," Wintermute analysts said.
Engagement from hedge funds
To illustrate the growing institutional engagement in bitcoin, Dragosch noted that over 60% of top global hedge funds are now holding bitcoin via ETFs. He emphasized that hedge funds remain 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). However, there are also plenty of family offices, a few institutional investors, and advisors," Dragosch said.
The Bitwise European Head of Research described spot bitcoin ETFs as attracting a broad range of investors, from hedge funds to pension providers.
"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. Notably, the filing also revealed that the board no longer holds any position in Grayscale.
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