Professional Firms' Growing Grip on Bitcoin ETFs Market, Forecasting Potential Boom
Summary:
Bitwise CIO, Matt Hougan, highlights the growing influence of professional firms in the Bitcoin ETFs market. Recently disclosed data reveal over 900 professional entities investing in spot Bitcoin ETFs, after consistent growth from an initial 563 firms. Despite being in the early stages of investment, with professional investors holding 7-10% of total investments, Hougan anticipates substantial increases as firms follow a typical four-step investment trajectory. This underscores his optimism for the future of Bitcoin ETFs. However, the information should not be treated as investment advice or recommendations.
In the recently submitted 13F filings, it's been revealed who is purchasing the spot Bitcoin ETFs and the size of their holdings. The success of these ETFs was praised by Bitwise's Chief Investment Officer, Matt Hougan, who also highlighted a substantial detail that could potentially be overlooked by the media, and contributes to his increasing optimism around the BTC ETFs. According to Hougan, 563 professional investing entities claim to own Bitcoin ETFs that total to approximately $3.5 billion. He predicted these figures could see an uptick with potentially over 700 companies holding assets estimated at close to $5 billion.
Hougan was right on the money, as the most recent data from K33 Research shows 900-plus firms disclosing their Bitcoin ETF holdings. Additional information shared by K33 Research’s Senior Analyst Ventle Lunde on May 16 showed that, according to 13F reporting, 937 professional firms held investments in American spot ETFs as of the end of the first quarter. Gold ETFs, in comparison, only attracted 95 professional investing entities during their debut quarter.
The lion's share of institutional capital has been pulled in by the largest ETFs as noted by Eric Balchunas, a Senior ETF analyst at Bloomberg, with BlackRock's IBIT claiming more than 400 holders.
This is a "tremendous success," Hougan noted, adding that any financial advisor, family office, or institution contemplating Bitcoin exposure is not alone. Despite that, the executive mentioned that of the reported $50 billion in assets under management (AUM), only approximately 7-10% are owned by professional investors. However, K33's data indicates this figure might be hovering around 18%.
Hougan ponders whether the media's portrayal of the spot Bitcoin ETFs as being mainly "driven by retail" might mean an important emerging trend could be unobserved.
He proposed a four-phase investment trajectory witnessed among institutions. Firstly, 6-12 months are spent on due diligence or investment evaluation. The second phase sees professionals venture a small personal allocation ahead of exposing their investors to the market. This usually leads to more substantive allocations throughout the client book, typically between 1-5% of the portfolio, approximately six months after the first allocation.
Hougan explained how this indicates the recent 13F filing allocations could be just the beginning, using Hightower Advisors as a case in point. Currently, their Bitcoin ETF allocation only represents 0.05% of their total assets. If they pursue the aforementioned four-step investment process, a 1% allocation down the line would equal a hefty $1.2 billion from that single firm. Multiply that by the increasing number of professional investors in the market and Hougan's enthusiasm becomes more understandable.
It's worth noting that this article does not provide investment advice or recommendations. Every investment and trading decision carries inherent risks, and readers are encouraged to thoroughly research before making any financial moves.
Published At
5/16/2024 11:27:18 PM
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