Updated 13F filings for U.S. spot bitcoin exchange-traded funds (ETFs) reveal promising signs of growing institutional interest in the digital asset, according to Coinbase's weekly market report.
"We think that the continued spot bitcoin ETF inflows during bitcoin’s underperformance may be a promising indicator of sustained interest in crypto from the new pools of capital that the ETFs give access to," Coinbase analysts David Duong and David Han said. ETFs increased access to crypto because they trade like traditional equities on stock exchanges, meaning asset managers no longer have to buy bitcoin directly to gain exposure to it.
13F reports are only filed by firms with more than $100 million in managed assets, making them an indicator of the level of institutional enthusiasm in and ownership of particular assets. The analysts noted there has been rising interest in spot bitcoin ETFs in the second quarter of 2024 compared to the first quarter when the first bitcoin ETFs launched.
"A growing portion of these flows appear to be driven by institutions, whose ownership of shares rose from 21.4% to 24.0%," the Coinbase analysts said in the report.
Increased inflows from investment advisors
The report highlighted the increase in institutional inflows from the "investment advisor" category. These advisors manage significant amounts of capital, often making decisions about asset allocation, investment strategies and specific securities purchases on behalf of their clients.
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"The proportion of institutional holders categorized as 'investment advisors' increased from 29.8% to 36.6%, from 6% to 9% of total shares," Duong and Han said.
There were also a number of new notable holders of bitcoin last quarter, including Goldman Sachs and Morgan Stanley, which are likely holding digital assets on behalf of their clients, the analysts said. Goldman Sachs holds U.S. spot bitcoin ETF shares valued at approximately $418 million as of June 30, according to its quarterly 13F filing with the U.S. Securities and Exchange Commission, submitted on Tuesday.
The report said the percentage of hedge fund bitcoin ETF holdings among institutions fell from 37.7% to 30.5%, however, that decline may be an indication that these firms are trading the basis (an arbitrage strategy between spot and futures prices), as open interest in bitcoin futures on the CME exchange has increased by 15% to $2.75 billion worth of shares in the second quarter.
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