Investment advisors have significantly increased their stakes in spot Bitcoin exchange-traded funds (ETFs) during the second quarter of 2024, while hedge fund holdings have experienced a slight decline, according to a report from cryptocurrency exchange Coinbase.
The report, published on August 16, suggests that investment advisors’ involvement in spot Bitcoin ETFs is likely to continue growing. Coinbase stated,
"The rate of investment advisors holding spot Bitcoin ETFs is only going to increase further as more brokerage houses complete their due diligence on these funds."
During the second quarter of 2024, the proportion of institutional investors categorized as "investment advisors" rose by 3%, now accounting for 9% of total institutional investment in these ETFs. This data is based on firms managing over $100 million in assets, as required by the US Securities and Exchange Commission’s (SEC) 13-F form.
Coinbase also highlighted that large inflows into Bitcoin ETFs might not be immediate due to the slow summer period in the United States. The report noted
"Large inflows might be delayed due to the summer period in the US (June-August), which can hinder financial advisors from attracting new clients right away."
It explained that many potential investors are likely on vacation, which could lead to "choppy" price action. Since July 18, Bitcoin's price has dropped 9.86%, trading at $59,132 at the time of publication.
In contrast, hedge fund managers have reduced their holdings in spot Bitcoin ETFs, possibly due to exploiting the price differences between spot Bitcoin ETFs and Bitcoin futures contracts, a strategy known as "trading the basis." Coinbase pointed out that the Chicago Mercantile Exchange (CME) Bitcoin futures contracts grew by 15% in the second quarter, reaching $2.75 billion.
Despite Bitcoin's underperformance during the quarter, with its price falling from near its all-time high of $71,333 on April 1 to $60,888 by June 30, Coinbase emphasized the positive momentum in institutional investments. The "ETF complex" saw a total of $2.4 billion in net inflows from institutional investors during this period.
Since the launch of spot Bitcoin ETFs on January 11, total inflows have reached $17.35 billion, according to data from Farside.
