In a new memo, Bitwise Chief Investment Officer Matt Hougan provides a detailed analysis of early adopters of Bitcoin exchange-traded funds (ETFs), based on a 13F filing with the SEC. His insights highlight the strong support for Bitcoin ETFs from professional investment firms and herald a potential shift in the Bitcoin investment landscape.
Since its launch on January 11, the Bitcoin ETF has captured an impressive $11.7 billion in assets, making it the most successful ETF launch in the history of a financial product. The explosive start sparked widespread interest in the identity of investors – whether they were primarily retail investors or professionals.
Who is buying spot Bitcoin ETFs?
Hogan’s memo provides a clear answer. “A lot of professional investors own Bitcoin ETFs,” he said. These people are not just ordinary investors; they are investors. They are one of the most respected and important asset managers in the industry. For example, Hightower Advisors is ranked the second-ranked RIA firm in the United States by Barron’s, manages $122 billion in assets, and currently holds $68 million in Bitcoin ETFs. Likewise, Bracebridge Capital, a prominent Boston-based hedge fund that manages endowments for institutions such as Yale and Princeton, has invested $434 million.
Other significant stakeholders include Cambridge Investment Research, which holds $40 million, Sequoia Financial Advisors, which holds $12 million, Integrated Advisors, which holds $11 million, and Brown Advisory, which holds $4 million in Bitcoin ETFs. As of the latest data available on Thursday, a total of 563 professional investment firms reported owning Bitcoin ETFs worth a total of $3.5 billion. Hougan expects those numbers could grow to more than 700 companies with nearly $5 billion in total assets under management by the May 15 filing deadline.
“It’s absolutely huge,” Hogan explained. “For any financial advisor, family office or institution wondering whether you are the only one considering Bitcoin investment, the answer is clear: you are not alone.”
Historically, the scale of shareholding held by professional investors is unprecedented. Bloomberg ETF senior analyst Eric Balchunas called the number of large investors participating in Bitcoin ETFs “insane.” By comparison, when gold ETFs were launched in late 2004 (previously considered the most successful ever), they attracted more than $1 billion in just five days. However, their first 13F filing showed that only 95 professional firms had invested. In contrast, the Bitcoin ETF has significantly exceeded this standard from its initial filing.
Despite the surge in professional interest, Hougan’s memo warned that a significant portion of the $50 billion in total assets under management in Bitcoin ETFs is still held by retail investors. He estimates that professional investors currently account for only 7-10% of all assets. However, he said the media’s portrayal of these ETFs as “retail-driven” funds may be ignoring an important emerging trend.
“Most investors follow familiar patterns,” Hogan said, describing a typical four-step investment trajectory observed among institutions. Initially, there is a due diligence period lasting 6 to 12 months. After this, the professional may take a small personal allocation to test the waters before recommending a wider allocation to the client. Ultimately, this results in them making larger, platform-wide allocations across their entire client roster, typically ranging from 1-5% of the portfolio.
Given these insights, Hougan remains “incredibly” bullish on the future of Bitcoin ETFs. “The distributions we saw in recent 13F filings were just down payments,” he concluded. He emphasized that firms like Hightower Advisors, which currently have distributions of 0.05%, have the potential to significantly increase investments. “Multiply that by the growing number of professional investors involved in the space, and you can start to see the reasoning behind my enthusiasm.”
It’s worth noting that yesterday, following Hougan’s memo, may be Bitcoin’s most significant 13F disclosure to date. The Wisconsin Investment Commission reported purchases of $99,167,688 (2,450,400 shares) of BlackRock’s IBIT and $63,687,310 (1,013,000 shares) of Grayscale’s GBTC.
At press time, the BTC price was $61,940.
Featured image created with DALL·E, chart from TradingView.com
