18 May

The institutional interest in Bitcoin (BTC) has reached unprecedented levels, as indicated by the latest 13F filings submitted by major financial institutions to the United States Securities and Exchange Commission (SEC).

CoinShares data reveals that there are presently over 1,900 holders of US Exchange-Traded Funds (ETFs), with the average Bitcoin allocation in portfolios standing at 0.6%.

The Hedge Funds' Adoption of Bitcoin

Hedge funds are leading the way in the growing inclination towards Bitcoin, according to additional insights into professional investment organizations. Hedge funds typically place 2.1% of their portfolios in the flagship digital asset, followed by holding corporations and private equity firms with 1.5% and 1%, respectively.

Sam Baker, an analyst at the cryptocurrency brokerage business River, supports this trend by pointing out that 52% of the top 25 US hedge funds have made investments in this type of commodity. The range of these hedge fund holdings is impressive, spanning from Bluecrest Capital Management's relatively small 8 BTC allocation to Millenium Management's substantial 27,263 BTC position.

Millennium made significant investments totaling approximately $2 billion in ETF products, with substantial allocations of $844.2 million in BlackRock’s iShares Bitcoin Trust (IBIT) and $806.7 million in Fidelity’s Wise Origin Bitcoin Fund (FBTC), alongside other notable ETFs.

Despite the outflows observed in April, the interest in BTC ETFs has remained resilient. Recent data indicates that the inflows into these ETFs in May have compensated for the setbacks of the previous month. This week alone, ETFs purchased over $1 billion worth of BTC, pushing their total Bitcoin holdings to a new record high.

Bloomberg ETF analyst Eric Balchunas highlighted the robust performance of Bitcoin ETFs, noting, "The Bitcoin ETFs have put together a solid two weeks with $1.3 billion in inflows, which offsets the entirety of the negative flows in April—putting them back around high water mark of +$12.3 billion net since launch. This key number IMO bc it nets out inflows and outflows (which are normal).”

However, despite the enthusiasm surrounding ETFs, on-chain Bitcoin transactions present a contrasting picture, with dwindling transaction volumes. Data from IntoTheBlock reveals that the 7-day average for new BTC addresses dropped to 276,000 last week, marking its lowest point since July 2018.

Analysts at IntoTheBlock posed questions about the reasons behind this subdued on-chain activity, considering whether ETFs are serving as a proxy for new users, if there's a migration of activity off-chain, or if there's a lack of new entrants in the market.

Nonetheless, experts suggest that the subdued on-chain activity may not necessarily indicate bearish sentiment. It's plausible that a growing number of newcomers are opting for ETFs as their preferred avenue for gaining exposure to Bitcoin.

May 2024, Cryptoniteuae

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