Bitwise CIO Highlights Record-Breaking Institutional Surge in Bitcoin ETFs

Due to a notable increase in institutional interest as well as the enthusiasm of regular investors, Bitcoin ETFs are breaking all previous records for fastest-growing ETFs in history. Bitwise CIO Matt Hougan claims that, in contrast to common opinion, institutional investors are a major factor in the quick uptake of Bitcoin ETFs.

Bitcoin ETFs have surpassed previous records established by other ETFs with an astounding $17.5 billion in net inflows since their introduction in January. In comparison, the previous record holder, the Nasdaq-100 QQQs, raised almost $5 billion in its first year of trading. Bitcoin ETFs are expected to significantly outperform this benchmark.

Institutional Holdings on the Rise

In the last quarter, institutional ownership of U.S. spot Bitcoin ETFs climbed to 24%, up from 21.4% in the previous quarter. This increase occurred despite a 13% decline in total assets under management due to falling Bitcoin prices. Major financial players, including Goldman Sachs and Morgan Stanley, were among the new institutional investors, contributing to an inflow of $2.4 billion during the quarter. While investment advisors increased their share of total holdings, hedge funds saw a decline.

Despite this growth, some critics remain skeptical, arguing that Bitcoin ETFs are primarily driven by retail investors with limited institutional backing. They point to 13F filings showing that, as of Q2 2024, institutions hold only 21% of Bitcoin ETF assets, with retail investors holding the majority at 79%.

Hougan responds, however, that these numbers don’t give the whole picture. He shows that Bitcoin ETFs have attained previously unheard-of levels of institutional adoption by looking at the top ten fastest-growing ETFs in history. The Nasdaq-100 QQQs ETF is the only one that comes close, but even this comparison is biased due to variations in the accessibility of historical data.

Institutional investors are also realizing the potential of these financial products, which is contributing to the Bitcoin ETF boom’s record-breaking expansion, even as retail demand undoubtedly drives it.