Bitcoin ETF Submission Q1 Summary: Short-term traders, ‘hot sauce’ investment preferred by various investors

With Q1 13F filings not flowing in last week, the market now has a comprehensive picture of some of the major players who have purchased spot Bitcoin ETFs and how much they are holding at the end of the three-month period. In March.

13F filings are quarterly reports from institutional investment managers with more than $100 million in equity assets under management. The filing details the institution’s holdings.

What is now clear is that not only did a mix of investors purchase newly launched spot Bitcoin ETFs issued by financial giants such as Grayscale, BlackRock, and Fidelity, but the majority of trading volume during the first quarter appears to have been fueled by short-term trading. It will. Term trading with excellent liquidity.

“Ultimately, the amount we report in our 13Fs is only a fraction of our total trading volume since launch,” Bloomberg ETF analyst Eric Balchunas told The Block.

According to The Block Data Dashboard, on the last trading day of the first quarter (March 28), spot Bitcoin ETFs generated $182 billion in cumulative trading volume. However, only a small portion of that volume came from institutions holding long positions, according to the 13F filing.

James Butterfill, head of research at CoinShares, said total assets under management across all spot Bitcoin ETFs are just $15.4 billion, according to the 13F filing. This total also represents a limited amount of total AUM of $62.2 billion across 11 Bitcoin exchange-traded funds available to investors.

Find out the Bitcoin AUM total compared to what was reported in 13F. Image: CoinShares.

Comparing the $182 billion in cumulative trading volume to the $15.4 billion in spot Bitcoin ETF shares held at the end of the quarter, we see that short-term trading accounted for most buying and selling activity during the period.

“Large investors like liquidity. They like to get in and out unnoticed,” said Balchunas, adding that BlackRock’s ETF (ticker symbol IBIT) has achieved liquidity surprisingly quickly and that may be part of its appeal. added. “oBeing very liquid will meet all the criteria for larger investors,” he said.

Grayscale’s ETF remains the largest by assets under management but has lost billions of dollars since launch, while BlackRock’s fund has surged to more than $17 billion in AUM as of Friday, according to The Block Data Dashboard. I did.

Morgan Stanley, hedge funds and Wisconsin

The fact that hundreds of financial institutions, including giants like Morgan Stanley, have purchased shares of ETFs that track the world’s most popular cryptocurrency (by market capitalization) is historic in many ways. But according to Balchunas, it was also impressive how diverse those investors were.

He said, “The diversity of the institution is higher than I expected. I thought I would see almost all advisory members.” “Many of the largest hedge funds in the country are (also) located there.”

One of the most interesting investors to report owning physical Bitcoin ETF shares included Bracebridge Capital, a hedge fund that manages endowments at Yale University and Princeton University. Bracebridge Capital reported that it held over $400 million in physical Bitcoin ETFs as of the end of the first quarter.

Earlier this week, Matt Hougan, CIO of Bitwise, the issuer of spot Bitcoin ETFs, found it notable that Hightower Advisors, the second largest RIA firm in the US, owns $68 million of Bitcoin ETF shares. Hougan called some financial institutions’ positions a “down payment” on future exposure.

“About six months after the initial allocation, many firms begin making allocations ranging from 1 to 5 percent of the portfolio across their entire client list,” Hougan said in a note to clients.

Perhaps one of the most interesting revelations was when the Wisconsin State Investment Board reported that it owns over $160 million in Bitcoin-based funds. JP Morgan also surprised some by reporting that it owns shares of a spot Bitcoin ETF. However, the disclosed holdings were minimal. JPMorgan CEO Jamie Dimon has consistently been critical of Bitcoin.

“Europe has had access to spot-based Bitcoin ETFs for the past three years, while the U.S. has not. What we are seeing now is the release of years of pent-up demand,” said CoinShares’ Butterfill. “There are over 1,900 holders of the US (spot Bitcoin) ETF,” he added.

Susquehanna International Group’s $1 billion in Grayscale ETF shares was the largest single position reported in the filing, according to Fintel data.

‘spicy sauce’

Since its launch in January, the Bitcoin ETF has generated significant trading volume compared to other previously launched exchange-traded funds. Dozens of traditional financial institutions appear to have bought into the Bitcoin craze, albeit in their own ways.

But what ultimately drives all the buying and selling?

“Hot sauce. If you’re a 60/40 person (the average investor with 60% in stocks and 40% in bonds), you’re not going to sell Vanguard and buy IBIT, otherwise it’s going to be a boring meal.” Balchunas said. “Ten percent of their portfolio could be allocated to this speculative hot sauce.”

But the excitement about Bitcoin and its potential upside is not enough to justify what has happened so far, Balchunas added. He acknowledged that there are many other “hot sauce” style investments available to investors.

“What makes Bitcoin interesting is that there is an underlying story about hedging against a fall in the value of the dollar,” he said. “Bitcoin to me is like gold, but to me as a teenager.”

When asked if he owns any cryptocurrency or physical Bitcoin ETF shares, Balchunas said he has a “simple” 401k.

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