Bitcoin

Insights From Bitwise CIO: Unveiling the Buyers Behind Bitcoin ETFs

In a recent memo from Matt Hougan, Chief Investment Officer at Bitwise, a thorough analysis of the early adopters of Bitcoin Exchange-Traded Funds (ETFs) based on 13F filings with the SEC was provided. This indicates a substantial acceptance of Bitcoin ETFs by professional investment firms, signaling a potential shift in the BTC investment landscape.
Since their launch on January 11, Bitcoin ETFs have amassed an impressive $11.7 billion in assets, making it the most successful ETF launch in financial history. This rapid growth has generated curiosity about the investors – whether they are primarily retail or professional.
Who Is Acquiring the Spot Bitcoin ETFs?
According to Hougan’s memo, the answer is clear. “A lot of professional investors are holding Bitcoin ETFs,” he stated. These investors are among the most esteemed and significant asset managers in the industry. For example, Hightower Advisors, ranked #2 RIA firm in the US by Barron’s and managing $122 billion in assets, now owns $68 million in Bitcoin ETFs. Similarly, Bracebridge Capital, a renowned Boston-based hedge fund handling endowment funds for institutions like Yale and Princeton, has invested a substantial $434 million.

Other notable investors include Cambridge Investment Research with $40 million, Sequoia Financial Advisors with $12 million, Integrated Advisors holding $11 million, and Brown Advisory with $4 million in Bitcoin ETF holdings. As per last Thursday’s data, 563 professional investment firms have disclosed owning a total of $3.5 billion in Bitcoin ETFs. Hougan predicts that by the May 15 filing deadline, these numbers could surpass 700 firms with assets under management nearing $5 billion.
Hougan pointed out, “This is absolutely massive.” He emphasized that professional investors exploring Bitcoin exposure are not alone, ranging from financial advisors to family offices and institutions.
The professional investor ownership scale has been considered unprecedented historically. Eric Balchunas, a senior Bloomberg ETF analyst, referred to the involvement of large-scale investors in Bitcoin ETFs as “bonkers.” In comparison, when gold ETFs were introduced in late 2004 – previously considered the most successful launch, they attracted over $1 billion in five days, with only 95 professional firms investing. Bitcoin ETFs have far surpassed this from their inception.

Despite the surge in professional interest, Hougan cautioned that a considerable portion of the $50 billion asset management in Bitcoin ETFs is still held by retail investors. He estimates that professional investors currently hold 7-10% of all assets. Nevertheless, media representation of these ETFs as “retail-driven” funds may overlook an emerging trend.
Hougan explained that most investors follow a common progression, observing a typical four-step investment strategy among institutions. This includes a due diligence period of 6-12 months, followed by a small personal allocation before recommending broader allocations to clients, leading to substantial portfolio-wide allocations, usually ranging from 1-5%.
With these understandings, Hougan maintains an optimistic view on the future of Bitcoin ETFs. He concluded that the recent 13F filings are just the beginning of a promising trend. Notably, after Hougan’s memo release, an essential 13F disclosure for Bitcoin occurred, with the State of Wisconsin Investment Board reporting acquisitions of $99,167,688 of BlackRock’s IBIT and $63,687,310 of Grayscale’s GBTC.
At the time of writing, the BTC price is $61,940.
BTC price, 1-day chart | Source: BTCUSD on TradingView.com
Featured image created with DALL·E, chart from TradingView.com

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