Who is buying Bitcoin? A 2024 ETF and institutional investor landscape

While the majority of Bitcoin ETF investments in the first and second quarters of 2024 still come from retail investors or non-filers, participation from professional investors may be increasing as professional investors make small personal allocations before making allocations on behalf of clients and they want to test the waters before making them public to investors.

In the first quarter of 2024, nearly 1,015 institutions held approximately $11.72 billion in Bitcoin spot ETFs. This accounts for approximately 23.2% of the total US Bitcoin ETF (including GBTC) market, but 76.8% of the holders are unknown (non-reporters, such as those with less than $100 million in assets, or retail investors). A large portion of institutions only hold a small portion of the total assets of the BTC ETFs they manage.

Despite a 12% drop in the price of Bitcoin in the second quarter of 2024, institutional investors continue to buy Bitcoin ETFs, with 1,100 institutions holding $11 billion (although the value of holdings has decreased compared to $11.73 billion in the first quarter, the holdings actually increased due to a more than 12% drop in BTC in the second quarter). The number of institutions increased by 8.37% compared to the first quarter (1,015). In the second quarter of 2024, there were 6,794 13F institutions holding positions with a total market value of more than $48.66 trillion, so nearly 1/6 of the 13F institutions held spot Bitcoin ETFs.

As of October 8, 2024, governments hold approximately 529,365 bitcoins, worth $32.968 billion, accounting for 2.52%. 42 public companies hold 363,827 bitcoins, worth $22.659 billion, accounting for 1.73% of the total supply. 12 private companies hold approximately 359,638 bitcoins, worth $22.398 billion, accounting for 1.71% of the total. The total number of bitcoins is 2,100,000,000,000.

20 In January 2024, the United States approved the Bitcoin spot ETF, providing investors with a more convenient way to obtain cryptocurrencies, which quickly made ETFs the largest group of holders to date. As of October 8, 2024, global BTC ETFs held more than 1.1 million BTC (about 68.726 billion US dollars), accounting for 5.26% of the total supply; among them, the US BTC ETF held about 928,000 BTC (about 57.793 billion US dollars), accounting for 84.13% of the total global BTC ETF.

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

The SEC's Form 13F is a quarterly report that requires institutional investors (such as hedge funds, asset management companies, etc.) with more than $100 million in assets under management to disclose their holdings of U.S. stocks, including common stocks, exchange-traded funds (ETFs), and convertible bonds to the SEC. The main purpose of 13F is to provide market transparency and let investors and regulators understand the holdings of large institutional investors.

According to the 13F report filed with the U.S. Securities and Exchange Commission in the first quarter of 2024, nearly 1,015 institutions held approximately $11.72 billion in Bitcoin spot ETFs in the first quarter. While this accounts for approximately 23.2% of the total U.S. Bitcoin ETF (including GBTC) market, 76.8% of the holders are unknown (non-reporters, such as those with less than $100 million in assets, or retail investors).

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

Note: In the first quarter of 2024 (as of March 31), Grayscale GBTC outflow was about 14.767 billion US dollars, and BTC ETFs such as BlackRock, Fidelity and Bitwise had a net inflow of about 12.132 billion US dollars. In other words, several ETFs that passed the review in January had a total inflow of 26.899 billion US dollars. As of the end of the first quarter of 2024, the asset size of US spot BTC ETFs (including GBTC, excluding other national ETFs) reached 50.58 billion US dollars.

If we look at the capital inflows of several spot BTC ETFs (BlackRock, Fidelity, Bitwise, etc.) that passed the review in 2024, as many institutions replace GBTC with ETFs with lower fees such as IBIT and FBTC, the shares held by these 1,000 institutions will increase.

Nearly 1,015 institutions held the ETF in the first quarter, excluding those with a value of 0.

Despite a 12% drop in the price of Bitcoin in the second quarter of 2024, institutional investors continue to buy Bitcoin ETFs, with 1,100 institutions holding $11 billion according to Bitwise (although the value of holdings has decreased compared to $11.73 billion in the first quarter, it has actually increased because BTC fell more than 12% in the second quarter). The number of institutions increased by 8.37% compared to the first quarter (1,015).

Two-thirds of institutional holders continued to hold or increase their holdings in the second quarter, but 34% of institutions chose to reduce or liquidate their holdings. These institutions are still concentrated in hedge funds, treasury bonds, quantitative and banking industries. According to Sina Finance data, there were 6,794 13F institutions in the second quarter of 2024, with a total holding value of more than 48.66 trillion yuan, so nearly 1/6 of 13F institutions held spot Bitcoin ETFs.

Note: In the second quarter of 2024 (as of June 30), Grayscale GBTC outflow was about $18.515 billion, and BTC ETFs such as BlackRock, Fidelity and Bitwise had a net inflow of about $14.522 billion. In other words, several ETFs that passed the meeting in January had a total inflow of $33.037 billion. As of the end of the second quarter of 2024, the asset size of US spot BTC ETFs (including GBTC, excluding other national ETFs) reached $50.34 billion. (In the first quarter, it was $50.58 billion, and the size of the position also needs to take into account the 12% drop in the price of Bitcoin, so the overall position is rising).

Among the institutions that disclosed, hedge funds and investment advisors are the largest holders, among which investment advisors are the largest in number, with more than 700 holding Bitcoin ETFs worth about $3.8 billion in the first quarter, while there are only 107 hedge funds, but the holdings are more concentrated, about $4.7 billion. In the second quarter, investment advisors surpassed hedge funds to become the largest holder group.

Bitcoin ETFs are attracting unprecedented interest from professional investors. Eric Balchunas, Bloomberg ETF analyst, said that such a large-scale investor participation is amazing for a new ETF. Historically, even the most successful ETFs, such as the 2004 gold ETF, which raised more than $1 billion in just five days, had only 95 professional firms invested in the product at the time of the first 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 of all time. After only two quarters on the market, the Bitcoin ETF is far ahead of other ETFs in terms of the number of holders and assets under management (AUM).

The only ETF that is somewhat comparable is the NASDAQ 100 QQQ, but this comparison may not be appropriate because the QQQ ETF was launched in March 1999, but Eric Balchunas only found historical 13F data from the first quarter of 2001 as a comparison (i.e., the data is lagged by 9 quarters). Even so, the number of institutional holders of the Bitcoin ETF is still three times that of the QQQ.