CryptoQuant founder Ki Young-Ju revealed that institutional investors only hold 20% of all spot Bitcoin exchange-traded funds (ETFs). According to the 13F filings of these companies, as of October 18th, they hold slightly over 193,000 BTC out of the 961,645 BTC held by all spot Bitcoin ETFs.
Ark Invest ARKB has the highest institutional ownership percentage, at 32.79%, followed by WisdomTree BTCW at 24.55%. However, the two ETFs with the largest net inflows, BlackRock IBIT and Fidelity FBTC, have 18.38% and 24.14% of their shares held by institutional investors, respectively.
Disclosures show that retail investors are responsible for the majority of the inflows into Bitcoin ETFs, even as institutional investors increase their interest and risk exposure. Macro investment researcher Jim Bianco pointed this out in a recent report.
Unlicensed debate
Bloomberg ETF analyst James Seyfart pointed out that most of the inflows into Bitcoin ETFs come from on-chain holders. According to him, around $13-14 billion of the total inflows into Bitcoin ETFs comes from on-chain holders. He added that while there may be some institutional interest, it is still relatively low, and in some cases, it may even take some time as not all institutional investors have the capacity to invest in Bitcoin. As an example, he mentioned the Wisconsin Retirement Fund:
“Wisconsin is probably one of the better-run public pension funds in the country, which means it has a lot of money, but most don’t. If you’re running a well-funded pension fund, you can do things like look at the risk profile of Bitcoin.”
However, he pointed out that most pension funds are underfunded, poorly managed, and plagued by corruption, and even if the managers see the potential of the asset, they are unlikely to invest in Bitcoin ETFs in the short term.
Huge success for Bitcoin ETF – Seyfart
Despite the relatively limited investment by institutional investors, Seyfart believes that Bitcoin ETFs have been hugely successful. In the unlicensed debate, he pointed out that based on its performance, the Bitcoin ETF is the most successful ETF in history.
While he acknowledges that institutional risk exposure is lower compared to retail investors, he still sees this as a positive for Bitcoin ETFs. He pointed out that the largest gold ETF only has 40% institutional ownership according to 13F filings. Therefore, 20% for Bitcoin after 10 months is a very good sign.
Seyfart also observed that financial advisors are responsible for over $2 billion of the inflows into Bitcoin ETFs, with IBIT alone seeing around $1.5 billion inflows. He called this a very positive sign, making the ETF the most successful ETF in the past two years.
Meanwhile, the analyst also believes that the level of inflows into Bitcoin ETFs is a good sign for the asset class, as significant inflows will attract larger institutional investors. Therefore, whether current institutional investors are buying ETFs for basis trading, arbitrage, or because they believe in Bitcoin, does not matter.
BlackRock IBIT now ranks among the top three ETFs for 2024 performance
While the debate over institutional adoption of Bitcoin ETFs and whether it is based on belief in the potential of Bitcoin continues, the performance of Bitcoin exchange-traded funds, particularly BlackRock IBIT, indicates that investor interest has not waned. After receiving net inflows of over $1 billion last week, IBIT’s year-to-date flows have exceeded $22 billion.
This makes it one of the top three ETFs in total flows year-to-date, which is an impressive feat considering it has only been in existence for 10 months. It is now the only ETF among the top five in total flows that has the shortest existence, as the histories of all other ETFs exceed 20 years, managing assets of over $300 billion.
With the success of Bitcoin ETFs, asset management companies are now preparing for the approval of ETFs for other cryptocurrencies by the Securities and Exchange Commission. Currently, applications for Solana, Litecoin, and Ripple XRP ETFs are pending. However, industry experts believe that Kamala Harris’ victory ended any hope for the approval of ETFs for other crypto assets.
