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By Matthew Hougan
Spot bitcoin ETFs have been an overwhelming success. Since launching January 11, they’ve attracted $11.7 billion in assets, becoming collectively the most popular ETF launch of all time.
Now everyone wants to know: Who’s buying? Specifically, people want to know whether professional or retail investors are driving the flows.
It’s an important question. The great promise of bitcoin ETFs is that they can open the door for professional investors to buy bitcoin en masse, dramatically increasing the pool of capital investing in the asset.
If professional investors are buying, that’s great. But if the flows are all retail, that’s less encouraging. Why? Because there’s simply not the same scale behind it.
For the first few months after the ETFs launched, there was no way to answer this question. Investors buy ETFs in brokerage accounts, meaning fund companies like Bitwise don’t automatically know who is buying their funds. But once per quarter, the SEC requires investors with more than $100 million in assets under management to report their holdings of publicly traded securities through something called a “13F” filing.
Those filings are technically due 45 days after the end of the quarter, meaning investors have until May 15 to file their reports. But thousands have already filed, so we now have a good initial view of who owns these ETFs.
And the data is very, very interesting. Here are the biggest three takeaways.
Takeaway #1: Lots of Professional Firms Own Bitcoin ETFs
For this memo, I analyzed all 13F filings for each of the 11 publicly traded spot bitcoin ETFs as of Thursday, May 9. The big news is: A lot of professional investors own bitcoin ETFs.
This includes iconic asset managers like:
All told, 563 professional investment firms reported owning $3.5 billion worth of bitcoin ETFs as of last Thursday. By the time the May 15 filing deadline arrives, I suspect we may end up with 700+ professional firms and total AUM approaching $5 billion.
This is absolutely massive. For any financial advisor, family office, or institution wondering if they were the only one considering bitcoin exposure, the answer is clear: You are not alone.
Takeaway #2: A Historic Scale of Professional Investor Ownership
This scale of ownership is off the charts for a new ETF. Most ETFs attract very few 13F filers in their first few months on the market. Bloomberg ETF analyst Eric Balchunas called the number of large-scale investors in the bitcoin ETFs “bonkers.”
The closest comparison I could find in the historical record was the launch of gold ETFs in late 2004. At the time, the gold ETF launch was considered the most successful ETF launch of all time, gathering more than $1 billion in its first five days on the market. But at its first 13F filing, gold ETFs had just 95 professional firms invested in the product.
From a breadth of ownership perspective, the bitcoin ETFs are a historic success.
Takeaway #3: Despite This, Retail Owns Most of the Float in Bitcoin ETFs (for Now)
While I’d consider $3-5 billion and 563-700 firms a huge success, it’s important to remember that bitcoin ETFs have $50 billion in assets under management.¹ As a percentage of total investment, therefore, professional investors own just 7-10% of all assets.
I suspect the media will jump on this figure to suggest that these ETFs are “retail-driven” funds, and to a degree, they will have a point: Retail investors do have a lot of money invested in bitcoin ETFs, and it’s a wonderful thing. It means they’re able to access these investments on the same terms as the world’s largest institutions.
But I’d argue that this narrative misses a key pattern that we’ve seen among institutions when it comes to crypto allocations.
Let me explain.
Why These 13Fs Leave Me Incredibly Bullish
Bitwise has been working for more than seven years helping professional investors access crypto. Today, we serve thousands of firms, including RIAs, brokers, family offices, and institutions.
One thing I’ve learned from doing this for seven years is that most investors follow a familiar pattern:
Not all advisors fit this mold, but we’ve seen it again and again.
This tells me that the allocations we see in recent 13F filings are just a down payment. Hightower Advisors may have $68 million allocated to bitcoin ETFs today, for instance, which is great, but it’s just 0.05% of their assets. If they follow the pattern outlined above, that allocation will build over time. And to put it in context, a 1% allocation of their portfolio to bitcoin would equate to $1.2 billion—all from a single firm.
Multiply that by the growing number of professional investors participating in the space, and you can begin to see what’s behind my enthusiasm.
Note
(1) The AUM number is higher than the $11.7 billion flows number I mentioned above because the Grayscale Bitcoin Trust (GBTC) converted to ETF status with $29 billion in pre-existing AUM on January 11.
Risks and Important Information
No Advice on Investment; Risk of Loss: Prior to making any investment decision, each investor must undertake its own independent examination and investigation, including the merits and risks involved in an investment, and must base its investment decision—including a determination whether the investment would be a suitable investment for the investor—on such examination and investigation.
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