Who is buying Bitcoin? ETFs and institutional investors: 2024 outlook

While the majority of Bitcoin ETF investment in Q1 and Q2 2024 will still come from retail investors and non-filers, we may see increased participation from professional investors as they make small personal allocations on behalf of their clients and want to see how things play out before opening it up to investors.

In the first quarter of 2024, approximately 1,015 institutions held approximately $11.72 billion in Bitcoin spot ETFs. This represents approximately 23.2% of the total US Bitcoin ETF market (including GBTC), but 76.8% of these holders are unidentified (e.g., non-reporting investors and individual investors with less than $100 million in assets). Many institutional investors hold only a small fraction of the total assets under management in the BTC ETFs they manage.

Despite a 12% drop in Bitcoin prices in the second quarter of 2024, institutional investors continued to purchase Bitcoin ETFs, with 1,100 institutions holding $11 billion in Bitcoin ETFs. (Although this represents a decrease from $11.73 billion in the first quarter, holdings actually increased due to BTC's over 12% drop in the second quarter.) This represents an 8.37% increase in the number of institutions compared to the first quarter (1,015). In the second quarter of 2024, 6,794 institutional investors listed in 13F filings held a total market value of over $48.66 trillion in Bitcoin ETFs, meaning that approximately one-sixth of all institutional investors listed in 13F filings held spot Bitcoin ETFs.

As of October 8, 2024, the government holds approximately 529,365 bitcoins, valued at $32.968 billion, representing 2.52% of the total supply. Forty-two publicly traded companies hold 363,827 bitcoins, valued at $22.659 billion, representing 1.73% of the total supply. Twelve private companies hold approximately 359,638 bitcoins, valued at $22.398 billion, representing 1.71% of the total supply. The total number of bitcoins is 2,100,000,000,000.

In January 2024, the United States approved a Bitcoin spot ETF, providing investors with a more convenient way to invest in cryptocurrencies. This ETF quickly became the largest holding group to date. As of October 8, 2024, global BTC ETFs held over 1.1 million BTC (approximately $68.726 billion), representing 5.26% of the total supply. Of this total, US BTC ETFs held approximately 928,000 BTC (approximately $57.793 billion), representing 84.13% of the global BTC ETF holdings.

So, who is buying spot Bitcoin ETFs? The answer lies in the SEC’s 13F filings, which reveal the activities of these investors.

The U.S. Securities and Exchange Commission (SEC)'s Form 13F is a quarterly report required by institutional investors (hedge funds, asset management firms, and others) with over $100 million in assets under management to disclose their U.S. equity holdings, including common stocks, exchange-traded funds (ETFs), and convertible bonds. The primary purpose of Form 13F is to enhance market transparency and inform investors and regulators about the holdings of large institutional investors.

According to the 13F report submitted to the U.S. Securities and Exchange Commission in the first quarter of 2024, approximately 1,015 institutions held approximately $11.72 billion worth of Bitcoin spot ETFs in the first quarter, accounting for approximately 23.2% of the entire U.S. Bitcoin ETF (including GBTC) market, although 76.8% of the holders were unidentified (non-reporting entities and individual investors with assets below $100 million).

In the first quarter of 2024, 18 institutions held more than $100 million in BTC-related assets, 106 institutions held more than $10 million in BTC-related assets, and 382 institutions held more than $1 million in BTC-related assets. Most of the BTC ETF assets held by institutions only account for a small portion of the total custodial assets.

Note: In the first quarter of 2024 (ending March 31st), Grayscale's GBTC saw a net outflow of approximately $14.767 billion, while BTC ETFs from BlackRock, Fidelity, and Bitwise saw net inflows of approximately $12.132 billion. This means that the selected ETFs saw a combined net inflow of $26.899 billion in January. As of the end of the first quarter of 2024, assets in US spot BTC ETFs (including GBTC, excluding ETFs from other countries) reached $50.58 billion.

Given the inflows into several spot BTC ETFs that passed the 2024 screen (BlackRock, Fidelity, Bitwise, etc.), the holdings of these 1,000 institutions are likely to increase as many institutions replace GBTC with lower-fee ETFs like IBIT and FBTC.

In the first quarter, approximately 1,015 institutions held the ETF, excluding those with zero value.

Despite a 12% drop in Bitcoin prices in the second quarter of 2024, institutional investors continued to purchase Bitcoin ETFs. According to Bitwise data, a total of 1,100 institutions held $11 billion in Bitcoin ETFs (this was down from $11.73 billion in the first quarter, but actually increased due to a more than 12% drop in Bitcoin prices in the second quarter). This represents an 8.37% increase in the number of institutions compared to the first quarter (1,015).

Two-thirds of institutional investors maintained or increased their holdings in the second quarter, while 34% reduced or sold off their holdings. These institutions remain concentrated in the hedge fund, finance, quantitative analysis, and banking sectors. According to Sina Finance data, there were 6,794 13F institutional investors in the second quarter of 2024, with total holdings exceeding 48.66 trillion RMB. Therefore, approximately one-sixth of 13F institutional investors hold spot Bitcoin ETFs.

Note: In the second quarter of 2024 (ending June 30), Grayscale's GBTC saw a net outflow of approximately $18.515 billion, while BTC ETFs from BlackRock, Fidelity, and Bitwise saw a net inflow of approximately $14.522 billion. This means that several ETFs that passed the January screening saw a combined inflow of $33.037 billion. By the end of the second quarter of 2024, assets in US spot BTC ETFs (including GBTC, excluding other country-specific ETFs) reached $50.34 billion. (In the first quarter, the total was $50.58 billion, but this holding also accounted for the 12% drop in Bitcoin's price, resulting in an increase in overall holdings.)

Among institutions that disclosed their holdings, hedge funds and investment advisors were the largest groups, with investment advisors holding the largest amount. In the first quarter, over 700 institutions held approximately $3.8 billion in Bitcoin ETFs. Hedge funds, with only 107 in total, held a highly concentrated position, totaling approximately $4.7 billion in assets. In the second quarter, investment advisors surpassed hedge funds to become the largest group.

Bitcoin ETFs are attracting unprecedented interest from professional investors. Bloomberg ETF analyst Eric Balchunas expressed surprise at the wide investor participation in a new ETF. Historically, even the most successful ETFs, such as the 2004 gold ETF, which raised over $1 billion in just five days, had only 95 professional institutional investors at the time of its initial 13F filing. In contrast, the Bitcoin ETF has achieved historic success in terms of broad investor participation.

Eric Balchunas also counted the institutional holdings of the 10 fastest-growing new ETFs in history. Just two quarters after its launch, the Bitcoin ETF has significantly surpassed other ETFs in terms of both number of holders and assets under management (AUM).

The only ETF with a reasonable comparison is the Nasdaq-100 Index Fund (QQQ), but this comparison is probably inappropriate because the QQQ ETF launched in March 1999, and Eric Balchunas could only find historical 13F data through Q1 2001 (meaning the data is nine quarters behind). Nevertheless, the Bitcoin ETF still has three times as many institutional holders as the QQQ.