As an analyst with a background in finance and experience following the cryptocurrency market, I find Matt Hougan’s analysis of Bitcoin ETF adoption by professional investors to be both insightful and significant. The data presented in his memo shows that some of the most reputable and substantial asset managers in the industry have embraced Bitcoin ETFs, with impressive assets under management (AUM) already amassed since their launch.
As an analyst, I’ve recently come across a memo penned by Matt Hougan, the Chief Investment Officer at Bitwise. In this document, he provides a comprehensive analysis of the early adopters of Bitcoin Exchange-Traded Funds (ETFs) using 13F filings with the Securities and Exchange Commission (SEC). His findings reveal a notable adoption of Bitcoin ETFs by professional investment firms, indicating a potential transformation in the BTC investment sphere.
Since Bitcoin ETFs were introduced on January 11, they have amassed an impressive $11.7 billion in assets, making them the most successful financial product launches in history. This rapid growth has generated significant curiosity about who is investing in these ETFs – are they mainly individual retail investors or professional entities?
Who Is Buying The Spot Bitcoin ETFs?
Hougan’s memo offers a definitive response. According to him, a significant number of esteemed and sizeable asset managers in the investment industry own bitcoin ETFs. For example, Hightower Advisors, the second largest RIA firm in the US with $122 billion under management, now holds $68 million worth of these ETFs. Likewise, Bracebridge Capital, a renowned hedge fund based in Boston that manages funds for institutions such as Yale and Princeton, has invested an impressive $434 million.
Among the notable institutional investors, Cambridge Investment Research owns $40 million, Sequoia Financial Advisors manages $12 million, Integrated Advisors holds $11 million, and Brown Advisory has $4 million in Bitcoin ETFs as of last Thursday’s data. In total, approximately 563 professional investment firms have reportedly invested around $3.5 billion in Bitcoin ETFs. By the May 15 filing deadline, it is predicted that this number could reach over 700 firms with a combined asset management value approaching $5 billion.
“Hougan stressed, ‘This is incredibly significant.’ For any financial advisor, family office, or institutional investor pondering whether they’re the sole ones deliberating over Bitcoin investments, be assured: You’re not the only one in this thought process.”
As a researcher looking back at historical data, I’ve come across an intriguing comparison between the scale of professional investor ownership in Bitcoin ETFs and that of gold ETFs when they first launched. When gold ETFs debuted in late 2004, attracting over $1 billion in just five days was considered a remarkable achievement. However, upon closer examination of their initial 13F filings, only 95 professional firms were identified as investors.
As a crypto investor, I’ve noticed the growing attention from professionals towards Bitcoin ETFs. However, according to Hougan’s memo, retail investors still hold a significant chunk of the $50 billion assets under management in these ETFs. He approximates that the proportion owned by professional investors is only around 7-10%. Yet, the media’s portrayal of these ETFs as “retail-driven” might overlook an important developing trend.
Hougan explained that most investors usually go through a consistent four-step process. To begin with, they spend six to twelve months conducting thorough research and investigation, which is referred to as the due diligence period. Afterward, professionals may make a preliminary investment by allocating a small amount for themselves as a trial run. Once satisfied, they recommend larger investments to their clients, resulting in significant allocations of 1-5% of their total portfolio.
Based on the information provided, Hougan’s optimism towards Bitcoin ETFs is “extremely” strong. He emphasized that the current investments disclosed in 13F filings are merely the beginning. For instance, Hightower Advisors, which currently holds a minimal 0.05% allocation, could significantly boost their investment. By considering the increasing number of professional investors entering this field, Hougan’s excitement becomes more apparent.
Yesterday, I came across a significant disclosure in the world of Bitcoin investment. Following Hougan’s memo release, the State of Wisconsin Investment Board made public its purchase of an impressive amount of stocks. They bought $99,167,688 (2,450,400 shares) of BlackRock’s IBIT and a substantial $63,687,310 (1,013,000 shares) of Grayscale’s GBTC. This disclosure is likely the most crucial 13F filing for Bitcoin so far.
At press time, the BTC price stood at $61,940.
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2024-05-15 08:56