Spot Bitcoin ETF See Record Inflows from Investment Advisors: Hedge Fund Holdings Fall
Spot Bitcoin ETF– Investment advisors have significantly increased their investments in spot Bitcoin exchange-traded funds (ETFs) during the second quarter of 2024, while hedge fund holdings have experienced a minor decline, according to recent data from cryptocurrency exchange Coinbase.
Rising Investment in Bitcoin ETFs by Advisors
The trend towards spot Bitcoin ETFs among investment advisors is expected to continue growing. Coinbase’s report, published on August 16, indicates that more brokerage houses are completing their due diligence on these funds. As a result, the proportion of institutional holders categorized as investment advisors increased by 3% during the second quarter of 2024, now representing 9% of total institutional investment. This figure is based on firms managing over $100 million in assets, which are required to file the U.S. Securities and Exchange Commission’s (SEC) 13-F form.
Hedge Fund Holdings Experience Slight Decline
In contrast, hedge fund managers have slightly reduced their holdings in spot Bitcoin ETFs. This decline is attributed to the practice of trading the basis, where hedge funds exploit the price differences between spot Bitcoin ETFs and Bitcoin futures contracts. The Chicago Mercantile Exchange (CME) Bitcoin futures contracts saw a 15% increase in the second quarter of 2024, reaching $2.75 billion.
Market Impact of Summer Season
Coinbase also noted that the large inflows into Bitcoin ETFs might be delayed due to the summer period in the U.S., which spans from June to August. This time of year often sees fewer financial advisors actively attracting new clients, and the market’s price action can be more volatile. Bitcoin’s price has fallen by 9.86% since July 18, trading at $59,132 at the time of publication.
ETF Market Performance and Institutional Interest
Despite the price decline, the ETF complex saw $2.4 billion in net inflows from institutional investors throughout the second quarter, reflecting positive investor sentiment amid the asset’s underperformance over the period. Bitcoin’s price began the second quarter near its all-time high of $71,333 but fell to $60,888 by June 30, representing a decline of about 14.6% for the quarter, according to CoinMarketCap data.
Since the launch of spot Bitcoin ETFs on January 11, there has been a total of $17.35 billion in inflows, as reported by Farside data. This indicates strong and growing interest in Bitcoin ETFs despite market fluctuations.
Key Takeaways
- Increased Advisor Interest: Investment advisors are increasingly investing in Bitcoin ETFs, with a 3% rise in their holdings.
- Hedge Fund Decline: Hedge funds are reducing their Bitcoin ETF investments, likely due to trading strategies related to futures contracts.
- Summer Impact: Seasonal factors may delay significant inflows and contribute to price volatility.
- ETF Performance: Despite Bitcoin’s price drop, ETFs saw substantial institutional investment, indicating ongoing interest.
This evolving landscape of Bitcoin investments highlights the growing role of investment advisors and institutional interest in Bitcoin ETFs, amidst challenges and market fluctuations.
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