Banks, Hedge Funds, Pensions Buying Spot Bitcoin ETFs

Banks, Hedge Funds, Pensions Buying Spot Bitcoin ETFs

Morgan Stanley, Point72 among firms buying the funds, reports say. Meanwhile, bitcoin price is rebounding.

RonDay
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Managing Editor
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Reviewed by: etf.com Staff
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Edited by: Kent Thune

Hedge funds, pensions and big banks were among the buyers of spot bitcoin ETFs in the first quarter, according to filings and published reports, giving impetus to the idea that demand for the new funds is widely spread among all varieties of investors.

At the same time, flows into spot bitcoin exchange-traded funds surged this week, reversing the outflows from last week.

Morgan Stanley, the big New York bank that hasn’t issued a crypto fund among its 14 U.S. ETFs, purchased about $270 million of the $18.8 billion Grayscale Bitcoin Trust ETF (GBTC), according to a quarterly filing. Investors pulled more than $17 billion from that fund since spot bitcoin ETFs began trading in January, due to management fees that are the highest among its 10 competitors. GBTC remains the biggest spot bitcoin ETF, ahead of BlackRock’s $17.9 billion iShares Bitcoin Trust (IBIT).

Banks, Hedge Funds, Pensions Buy Spot Bitcoin ETFs

Hedge funds including Steven Cohen’s Point72 Asset Management, Paul Singer’s Elliott Investment Management and the Israel Englander-run Millennium Management also picked up spot bitcoin ETFs, Bloomberg News reported. Market makers such as Ken Griffin’s Citadel Securities and trader Susquehanna International Group bought the funds in the first quarter, the story said. Susquehanna owns $1.8 billion of GBTC, Bitcoin magazine said.

“The big banks are likely holding the ETFs on behalf of their clients, while the hedge funds are probably making directional bets on bitcoin,” etf.com Senior Analyst Sumit Roy said. “Crypto is a large asset class valued at nearly $2.5 trillion; it's not a surprise to see institutional investors be involved, especially now that spot bitcoin ETFs are available.”

Whether the bets won or lost money isn’t clear from the filings, which don’t list the securities’ purchase date. The 13F documents are filed after the quarter ends and will give approximate number and value of shares, as well as other information like purchase of puts and options. Bloomberg reported that about 1,000 firms reported holding the ETFs.  

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

Spot bitcoin ETFs picked up $642 million in fresh inflows over the past week, reversing recent outflows, according to Bloomberg data. Investors pulled $112 million from the funds late last week. The inflows came during a week in which the price of bitcoin jumped around 10%. 

Ron Day is Managing Editor at etf.com. He joined the company in October 2022 and previously served as editor and deputy managing editor.

Ron covered business and financial news at Bloomberg News for 20 years, working on the breaking news, technology, commodities, headlines and First Word teams. He was previously senior editor at ESG news outlet Karma Impact and filled the same role at Boundless Impact. He also covered a variety of beats at New Jersey daily papers including the Daily Record in Parsippany, the North Jersey Herald & News and the Asbury Park Press. Ron's freelance work has been published in AARP.com, Investopedia.com and BigThink.com.

Ron is an advocate and fan of literacy. He hopes to one day master his Telecaster, rather than the other way around. His wonderful family includes a 10-lb. malti-poo named Emmy.