Institutional Investors Propel Bitcoin ETFs to Record-Breaking Adoption

You
don’t
have
to
have
had
your
eyes
glued
to
the
markets
recently
to
have
noticed
that
Bitcoin
ETFs
have
been
dominating
the
headlines
again
this
week,
in
every
sphere
but
that
of
focus
on
retail
investors.

In
a
recent
conversation
on
X,
Bitwise
CIO
Matt
Hougan
challenged
the
prevalent
belief
that
financial
instruments
are
a
consequence
of
retail
hysteria.
He
said
institutional
interest
in
their
kind
is
sweeping
the
markets
and
setting
records.

Bitcoin
ETFs
have
earned
nearly
$18
billion
since
the
start
of
the
year.
This
is
impressive
considering
that
the
Nasdaq-100
QQQs
raised
$5
billion
in
their
first
year.
Bitcoin
ETFs
are
on
track
to
exceed
one
of
the
finest
ETFs
ever.

1/
Bitcoin
ETFs
are
being
adopted
by
institutional
investors
faster
than
any
other
ETF
in
history.
Don’t
believe
the
“it’s
just
retail”
story.
The
data
prove
otherwise.

A
thread.

—
Matt
Hougan
(@Matt_Hougan)

August
21,
2024

Retail
Vs.
Institutional:
The
Numbers
Game

Critics,
however,
are
less
than
fully
convinced
by
the
hype.
They
argue
that
Bitcoin
ETFs
are
still
largely
driven
by
retail.
Up
to
Q2
2024,
institutional
investors
held
only
20%
of
AUM
in
BTC
ETFs
through
quarterly
disclosures
known
as
13Fs.
The
other
80%
is
held
by
the
retail
class,
an
imbalance
that
has
led
some
to
question
just
how
institutional
these
funds
really
are.

Bitcoin
is
now
trading
at
$64,128.
Chart:
TradingView

Institutional
Adoption:
Taking
A
Step
Closer

According
to
regulatory
filings
quoted
by
Reuters,
Goldman
Sachs
and
Morgan
Stanley
made
a
big
splash
in
the
second
quarter
of
2024
with
a
sizable
investment
into
spot
Bitcoin
ETFs.
Goldman
Sachs
picked
up
some
$418
million
in
Bitcoin
ETFs,
most
notably
$238
million
in
the
iShares
Bitcoin
Trust.
At
nearly
7
million
shares
as
of
June
30,
that
places
Goldman
near
the
top
of
institutional
investors
in
this
space.

Morgan
Stanley
was
close,
with
a
$188
million
investment
in
BlackRock’s
iShares
Bitcoin
ETF.
These
investments,
aside
from
its
stake
in
the
Ark
21Shares
Bitcoin
ETF
and
the
Grayscale
Bitcoin
Trust,
underline
the
growing
institutional
interest
in
Bitcoin
ETFsᅳperhaps
overshadowed
by
the
massive
retail
inflows.

Bitcoin:
A
Unique
Market
Position

Such
a
narrative
that
Bitcoin
ETFs
are
completely
retail-driven
would
fall
way
short
of
the
bigger
picture.
Although
there
has
been
retail
capital
flooding
into
these
products,
that
should
not
imply
institutions
aren’t
heavily
involved.
In
fact,
it
can
be
argued
strong
retail
interest
is
tilting
the
scales
of
perception,
making
institutional
adoption
look
less
impactful
than
it
actually
is.

Hougan’s
analysis
suggests
that
in
spite
of
the
domination
of
retail
investors,
Bitcoin
ETFs
have
rapid
institutional
adoption.
Not
only
is
the
trajectory
of
growth
in
these
ETFs
impressive,
but
it
indeed
represents
wider
acceptance
of
Bitcoin
within
institutional
circlesᅳa
fact
all
the
more
remarkable
given
the
kind
of
skepticism
traditionally
accorded
to
cryptocurrencies
by
traditional
finance.

Featured
image
from
Pexels,
chart
from
TradingView