Bitcoin ETFs Gain Popularity on Wall Street as Institutional Investors Buy In

Key Takeaways

• Prominent money managers and large institutional investors bought into spot bitcoin ETFs in the second quarter, with BlackRock’s IBIT emerging as a clear winner for inflows.
• Wall Street firms Goldman Sachs and Morgan Stanley revealed new positions in the bitcoin ETF market in the second quarter.
• The State of Wisconsin Investment Board added to its position in BlackRock’s IBIT, while exiting its Grayscale Bitcoin Trust holding.

Prominent Wall Street firms and large institutional investors bought into spot bitcoin (BTCUSD) exchange-traded funds in the second quarter, a sign of a healthy appetite for the products in the traditional financial sector.

Wall St. Laps Up Bitcoin ETFs

Goldman Sachs’ (GS) 13-F filing reporting a more than $400 million position in seven of the 11 spot bitcoin ETFs trading in the U.S. caught the eye of many investors and media. But it wasn’t the only big firm to disclose bitcoin exposure through ETFs.

Morgan Stanley (MS) also ramped up its bitcoin ETF holdings from the prior quarter, when it held two shares each of the Simplify Bitcoin Strategy ETF (MAXI) and the Valkyrie Bitcoin and Ether Strategy ETF (BTF).

According to the Wednesday filing, not only did Morgan Stanley add to those two holdings but it entered new positions in six other spot bitcoin ETFs worth roughly $189 million as of June 30. The iShares Bitcoin Trust ETF (IBIT) accounted for nearly all of that exposure.

Wells Fargo (WFC) expanded its holdings beyond the Grayscale Bitcoin Trust (GBTC) to include the Fidelity Wise Origin fund (FBTC), Invesco Galaxy bitcoin ETF (BTCO), iShares and VanEck Bitcoin Trust (HODL) funds.

It was not immediately clear whether those holdings were on behalf of clients. Morgan Stanley allowed its advisors to market bitcoin ETFs to clients earlier this month.

JPMorgan’s spot bitcoin ETF holdings dwindled to a small exposure to GBTC. This comes after the country’s largest bank reported holding shares in at least three other bitcoin ETFs at the end of the first quarter. At that time, those holdings were believed to be related to the bank’s role as a market maker and for the purpose of facilitating trading, according to Swan Bitcoin Lead Analyst Sam Callahan.

Renaissance Technologies, a quant-based hedge fund, also scaled up buying bitcoin ETFs in the second quarter, more than doubling its bet on Bitwise Bitcoin ETF, and adding new positions in the Franklin Bitcoin ETF (EZBC), iShares and VanEck funds. It sold all its shares in the Fidelity and Grayscale funds, and trimmed holdings in ARK 21Shares Bitcoin ETF (ARKB) and Invesco ETFs.

BlackRock’s IBIT Is a Clear Winner

Investors are increasingly looking to bet on Blackrock’s iShares Bitcoin Trust ETF. More than half of Goldman’s $418 million bitcoin ETF exposure, or roughly $238 million, went to that fund. It also accounted for the lion’s share of Morgan Stanley’s holdings of bitcoin ETFs.

Last week, London-based hedge fund giant Capula Management also disclosed ownership of more than $400 million of IBIT and the Fidelity ETF combined.

The State of Wisconsin Investment Board (SWIB), which is responsible for handling the retirement funds and investments for the state of Wisconsin, also added to its IBIT holdings in the second quarter. SWIB disclosed nearly 2.9 million shares of IBIT in its filing, up from 2.45 million disclosed at the end of the previous quarter. SWIB exited its position in the Grayscale fund.

Bitcoin ETFs are gaining popularity among institutional investors, as prominent Wall Street firms and large money managers increase their exposure to these investment vehicles. The second quarter saw significant inflows into spot bitcoin ETFs, with BlackRock’s iShares Bitcoin Trust ETF emerging as a clear winner.

Goldman Sachs and Morgan Stanley were among the Wall Street firms that disclosed new positions in the bitcoin ETF market. Goldman Sachs reported a position of over $400 million in seven of the 11 spot bitcoin ETFs, while Morgan Stanley increased its holdings and entered new positions in six other spot bitcoin ETFs. The iShares Bitcoin Trust ETF accounted for a significant portion of Morgan Stanley’s exposure.

Other financial institutions, such as Wells Fargo and Renaissance Technologies, also expanded their holdings in bitcoin ETFs. However, JPMorgan’s exposure to bitcoin ETFs decreased, with the bank holding a small position in the Grayscale Bitcoin Trust.

Investors are particularly interested in BlackRock’s iShares Bitcoin Trust ETF, with more than half of Goldman Sachs’ bitcoin ETF exposure allocated to this fund. London-based hedge fund Capula Management also disclosed ownership of over $400 million in the iShares Bitcoin Trust ETF and the Fidelity ETF combined.

The State of Wisconsin Investment Board added to its holdings of the iShares Bitcoin Trust ETF in the second quarter, while exiting its position in the Grayscale Bitcoin Trust. This move indicates the board’s confidence in the potential of bitcoin ETFs as an investment.

Overall, the growing interest and investment in bitcoin ETFs by institutional investors and Wall Street firms demonstrate the increasing acceptance and adoption of cryptocurrencies in the traditional financial sector.

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