- Hedge funds decided to ditch their BTC exposure in Q1 2025. Shocking, right?
- BlackRock’s IBIT saw a 15.6% drop in fund allocation. Who knew ETFs could go downhill so fast?
Okay, so here’s the deal: hedge funds apparently woke up one day and decided that Bitcoin wasn’t the golden goose they thought it was. Several funds trimmed their BTC exposure in Q1 2025.
And get this—Wisconsin, yes, the state, dumped its entire $321 million (that’s right, ALL of it) in BlackRock iShares Bitcoin ETF (IBIT). Guess they’re not into crypto anymore, according to their latest 13-F filings with the SEC. Well, who could blame them?
On top of that, the average portfolio allocation in IBIT dropped by a stunning 15.6%. If you’re feeling bad about your investments, just know that you’re not alone. We’re all in this together, right?
BTC ETF – Q1 Rebalance (More Like Q1 Disaster)
Meanwhile, Millennium Management LLC chopped its IBIT position by a whopping 41%, cutting it down to 17.6 million shares. But wait—there’s more! They even closed their position in the Invesco Galaxy Bitcoin ETF (BTCO).
Of course, they didn’t just get out of crypto entirely. No, no, they decided to dabble with some BTC-related exposure from Ark 21Shares and Grayscale Mini. Baby steps, I guess.
Another hedge fund, Brevan Howard, joined the club and reduced its IBIT holdings by 15.6%. Not exactly a stamp of confidence, huh?
The whole thing wasn’t exactly a shocker, given the market headwinds Q1 2025 threw at us. Tariff wars? More like a war on your portfolio.
During that same period, BTC dropped about 12%, going from $109K to a sad $76K. I mean, who wants to hold onto that?
Bitwise CIO Matt Hougan told Reuters that funds were probably getting cold feet due to a collapse in the premium they were getting from the basis trade—the difference between buying spot BTC ETF and shorting CME BTC Futures. He said,
“But that premium collapsed and reached its lowest around the end of March. So I’m not surprised to see hedge funds trim their holdings.”
The premium was a beauty, hitting 15%-20% annualized returns in late 2024. But surprise, surprise—by March, it dropped below 4%. Ouch. No wonder hedge funds weren’t interested anymore.
But here’s the twist: in Q2 2025, the premium surged to 9% (talk about a comeback), although it’s now slightly below 8%. Who knows, maybe it’s time for another shot at this thing?
And yes, spot BTC ETFs aren’t exactly on fire right now. In February and March, they saw $4B in outflows. But don’t cry for crypto just yet! April and the first half of May saw a glorious $5.2 billion in inflows. A nice little rebound, huh?
That little surge even pushed BTC above $100K for the first time since February. If you’ve been holding on tight, it’s looking like a little bull market might be brewing.
The CryptoQuant Bull Score Index reading of 80 suggests we could be heading into full-on bull mode, like the good old days before the November crypto explosion.
More inflows into U.S. spot BTC ETFs could push BTC higher, but a dip in demand could mean we hit a local top. BTC is currently hanging out at $103K, but who knows what tomorrow brings?
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2025-05-17 10:23