As Bitcoin ETFs gain momentum, institutional interest in cryptocurrency is on the rise. This marks a major shift in financial landscape.
Institutional investors continue to invest in the cryptocurrency space despite skepticism by major financial figures such as Jamie Dimon, Goldman Sachs Sharmin Mossavar Rahmani and others who labeled Bitcoin a “fraud”.
The growing trend of digital asset adoption is a result both of financial giants’ strategic choices and their wealth management client demands.
Bitcoin ETFs are now being held by more institutions
SEC filings 13F reveal that institutional investment in Bitcoin ETFs increased significantly during the second half of 2024.
Goldman Sachs has disclosed that it holds more than $418 million of various Bitcoin-related exchange traded funds, such as BlackRock’s iShares Bitcoin Trust, and Fidelity Bitcoin Exchange Traded Fund.
Goldman Sachs has historically been skeptical of cryptocurrencies. This change is important.
Morgan Stanley reported that it held spot Bitcoin funds worth $188,000,000, a slight decrease from its previous holdings.
This reduction is primarily the result of the sale shares in Grayscale Bitcoin Trust. Grayscale Bitcoin Trust has a higher management fee than other ETFs.
Morgan Stanley, however, has given its 15,000 financial advisers the authority to recommend BTC ETFs for select clients with high net worth, indicating a strategic decision to incorporate crypto exposure in wealth management.
Vetle Lunde Senior Analyst, K33 Research reported that the 13F filings revealed 1,199 firms had invested in US Bitcoin spot ETFs at the end of the second quarter, an increase of 262 firms from the first.
Lunde stated that “while retail investors continue to hold the majority, institutional investors have increased their share in total AUM of AUMs by 2,41 percentage points and now account for 21,15 percent,”
The sovereign wealth funds are increasing their exposure to crypto
Major banks are not the only ones to see a rise in their institutional holdings.
JPMorgan has minimal exposure to crypto, with only $42,000 invested in Grayscale Bitcoin Fund and $18,000 in ProShares Bitcoin Strategy ETF.
HSBC has shown the most significant investment, holding $3.6 Million in Bitcoin spot and UBS around $300,000. Bank of America revealed a total holding of $5.3 million. This was primarily BlackRock and Fidelity.
Hedge funds like Millennium Management, Capula Investment Management and Schonfeld Strategic Advisors as well Steven Cohen’s Point72 Asset Management also have reported holdings in Bitcoin ETFs.
Millennium Management manages $68 billion worth of assets and remains the top ETF holder, despite reducing its stakes in ETFs.
The crypto-exposure of sovereign wealth funds is also increasing.
Norwegian Sovereign Wealth Fund’s indirect Bitcoin holdings have increased by 62% from December 31, 2023 to mid-2024, when they owned 2,446 BTC worth $142.9 Million.
The growth can be attributed to the increased investment in MicroStrategy. Marathon Digital. Coinbase. and Block Inc.
Lunde says that despite this, the rise is more likely to be due to sector diversification and weighting rather than to a strategy of deliberately amassing Bitcoin.
According to SEC filings dated August 13, South Korea’s National Pension Service, the third largest public pension fund in the world, bought 24,500 MicroStrategy shares for $33,75 million.
The net assets of US Bitcoin Spot ETFs have risen to $52 billion.
Approval of Bitcoin ETFs in January 2024 by the SEC has marked a turning point for the cryptocurrency market.
The total net asset value of US Bitcoin Spot Exchange Traded Funds has risen to $52 billion.
Mathew McDermott (Global Head of Digital Assets for Goldman Sachs) described these ETFs’ launch as an important catalyst in reviving the crypto industry.
According to a recent Global Digital Finance survey (GDF), 93% of institutional investor firms, such as major financial institutions in the US, Asia and Europe, Middle East, have Bitcoins.
Nearly two thirds of the firms that hold Bitcoin are also involved in its trading through ETFs and ETPs.
Source: K33 research
Elise Soucie is the Executive Director for Policy and Regulations at GDF. She highlighted this year as a turning point in institutional adoption of crypto.
Soucie stated that “the SEC decision to approve Bitcoin ETFs had a significant impact on the market. This was further fueled by the performance of digital assets.”
The growing interest of institutions in cryptocurrencies (despite their volatility) is a sign of acceptance. It will help shape the future of the digital economy and enhance the integration of digital assets into mainstream finance.
The post Institutional Investors Shift Position as Bitcoin ETFs Spark Increased Crypto Adoption may be updated as new developments unfold.
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