- Institutional investors increased their Bitcoin exposure in the second quarter of 2024, 13F filings show.
- Bitwise’s Matt Hougan said the adoption rate has been “historic.”
- But traditional players won’t stop here, he said.
Spot Bitcoin exchange traded funds gained further adoption from institutional investors in the second quarter of 2024.
That trend will likely continue.
That’s according to Bitwise chief investment officer Matt Hougan, who analysed the most recent batch of 13F filings — quarterly financial disclosures that investment managers must file with the Securities and Exchange Commission — in a Tuesday post
“One thing I know is that most ETFs build over time,” Hougan wrote.
“Year one can be a challenge, but momentum tends to build into years two, three, four, and five. I expect the same thing to happen here.”
Wall Street adoption
Roughly 80% of the US stock market is held by institutional investors, Hougan said, but these same investors likely only hold 10% of all the Bitcoin.
“To get that number up to just 50% of the market, professional investors would need to buy” roughly $500 billion of Bitcoin, he said.
Looking at the latest 13F filings, Hougan said they’re already pouring into the new funds.
The number of institutional investors holding Bitcoin ETFs rose by 14% compared to the first quarter, to 1,100 entities from 965.
That’s accounting for the 112 investors who held Bitcoin ETFs in the first quarter but who then sold in the second, Hougan said. Meaning that 247 new firms gained exposure to the products.
“There was some healthy churn in these flows,” Hougan said.
While institutional investors owned 18.74% of the total assets under management in Bitcoin ETFs in the first quarter of the year, that number jumped to 21.15% in the second quarter, Hougan said.
That means institutional investors ended the quarter with $11 billion worth of Bitcoin through the ETFs.
“This is a great sign,” he added. “If institutions will buy Bitcoin when prices are volatile, imagine what could happen in a bull market.”
While Bitcoin’s price dropped 12% in the second quarter, it’s still up over 41% since New Year’s Day.
Historic performance
“Bitcoin ETFs are being adopted by institutions at the fastest rate of any ETF in history,” Hougan said.
Bitcoin ETFs already have 1,100 holders.
But three of the fastest-growing ETFs in history, the ones that saw the most adoption from institutions — Invesco’s QQQ ETF, the SPDR Gold Shares ETF, and JPMorgan’s BetaBuilders Japan ETF — only gained 374 holders, 118 holders, and 77 holders respectively in a comparable amount of time.
What’s more, Invesco’s 374 holders were gained over a period of nine quarters, not two, since Hougan couldn’t find 13F data on the fund until 2001.
Finally, Hougan said that 13F filings showed the median investor allocating only 0.47% of their portfolio to Bitcoin — a “highly encouraging number,” he said.
Professional investors “tend to build their positions over time,” Hougan wrote. “Many start with 1% or less of their portfolio, but that number tends to rise to 2.5% or even 5% over time.”
In other words, even if no other institutional investor decided to take exposure to Bitcoin ETFs, the existing professionals will likely increase their own exposure over time.
“The institutions are coming, and they’re coming in size,” Hougan said.
Crypto market movers
- Bitcoin fell 2.7% over the past 24 hours to trade at $59,200.
- Ethereum dropped 3.3% to trade at $2,575.
What we are reading
- Bitcoin to $200,000? The Fed is just one factor driving the price — DL News
- State Street Partners with Taurus for Tokenization — Milk Road
- US Treasury Withdraws Proposed Reporting Requirements for Unhosted Wallets — Unchained
- $USD weakening = Crypto strengthening — Milk Road
- ‘Short-sighted and stupid’: Dem megadonor abandons crypto super PACs — Politico
Tom Carreras is a Markets Correspondent for DL News. Got a tip? Email him at tom@dlnews.com.
