CryptoQuant founder Ki Young-Ju revealed that institutional investors own only 20% of all spot Bitcoin exchange-traded funds (ETFs). According to the 13F filings of these companies, as of October 18, they hold slightly over 193,000 BTC out of the 961,645 BTC held by all spot Bitcoin ETFs.
Based on the data, 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 inflows into Bitcoin ETFs, despite increased interest and risk exposure from institutional investors. Macro investment researcher Jim Bianco highlighted this in a recent report.
Unlicensed debate
Bloomberg ETF analyst James Seyfart noted that the majority of funds flowing into Bitcoin ETFs come from on-chain holders. According to him, approximately $13-14 billion of the total inflow into Bitcoin ETFs comes from on-chain holders. He added that while there may be some institutional interest, it remains relatively low, and in some cases, it may even take time as not all institutional investors have the capability to invest in Bitcoin. As an example, he mentioned the Wisconsin state pension fund:
“Wisconsin is probably one of the better-run public pension funds in the country, which means it’s well-funded, but most are not. If you run a well-funded pension fund, you can do things like look at Bitcoin’s risk exposure.”
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 this asset, they are unlikely to invest in Bitcoin ETFs in the short term.
Bitcoin ETF has achieved tremendous success – Seyfart
Despite limited institutional investor participation in Bitcoin ETFs, Seyfart believes that Bitcoin ETFs have achieved tremendous success. In the unlicensed debate, he pointed out that based on its performance, Bitcoin ETFs are the most successful ETFs in history.
While acknowledging that institutional risk exposure is lower compared to retail investors, he still views this as positive for Bitcoin ETFs. He noted that according to 13F filings, the largest gold ETF only has 40% institutional ownership. Therefore, 20% for Bitcoin after 10 months is a very good sign.
Seyfart also observed that financial advisors are responsible for over $2 billion in inflows into Bitcoin ETFs, with IBIT alone receiving around $1.5 billion. He called this a very positive sign, making ETFs the most successful ETFs in the past two years.
Meanwhile, the analyst also believes that the inflow levels of Bitcoin ETFs are 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, is not important.
BlackRock IBIT now ranks among the top three performing ETFs in 2024
While the debate over institutional adoption of Bitcoin ETFs and whether it is based on belief in Bitcoin’s potential continues, the performance of Bitcoin exchange-traded funds, especially BlackRock IBIT, indicates that investor interest has not waned. After receiving net inflows of over $1 billion last week, IBIT’s net flows for the year have exceeded $22 billion.
This makes it one of the top three ETFs in total flows year-to-date, which is impressive considering it has only been in existence for 10 months. It is now the only ETF in the top five in terms of flows that has the shortest history, as all other ETFs have been around for over 20 years, managing assets over $300 billion.
With the success of Bitcoin ETFs, asset management firms are now preparing for the Securities and Exchange Commission’s approval of other cryptocurrency ETFs. Currently, applications for Solana, Litecoin, and Ripple XRP ETFs are pending. However, industry experts believe that Kamala Harris’ victory has put an end to any hope of approving other ETFs for crypto assets.
