Bitwise CIO: Bitcoin ETFs breaking records, gaining unprecedented institutional traction

Bitcoin ETFs are breaking records as the fastest-growing ETFs in history, rapidly attracting institutional investors. 

According to Bitwise CIO Matt Hougan, contrary to the popular belief that retail investors are driving the surge in Bitcoin (BTC) ETF adoption, data shows that institutions contribute significantly to this trend.

Since its launch in January, Bitcoin ETFs have amassed a staggering $17.5 billion in net flows, outpacing previous records held by other ETFs. 

For context with this sentiment, the Nasdaq-100 QQQs, the previous record holder, garnered approximately $5 billion within its first year. Bitcoin ETFs are on track to eclipse this benchmark by a wide margin.

Last quarter, institutional ownership of U.S. spot Bitcoin ETFs increased to 24%, up from 21.4% in the first quarter, despite a 13% decline in total assets under management due to falling Bitcoin prices. 

Notable new institutional investors included Goldman Sachs and Morgan Stanley, contributing to a significant inflow of $2.4 billion during the quarter. Investment advisors’ share of total holdings rose, while hedge fund holdings declined.

Bitcoin ETF Critics 

Despite the phenomenal growth, Hougan says critics remain unconvinced. Critics argue that retail investors mainly drive Bitcoin ETFs with little institutional support. 13F filings show that as of Q2 2024, institutions only hold 21% of Bitcoin ETF assets, with retail investors holding the remaining 79%.

However, Hougan argues that the numbers don’t tell the whole story. By analyzing the top 10 fastest-growing ETFs in history, he highlights that Bitcoin ETFs have achieved unprecedented levels of institutional adoption in terms of the number of institutional holders and total institutional assets under management. 

The Bitwise CIO noted that the only ETF that comes close in comparison is the Nasdaq-100 QQQs, but even that comparison is skewed due to differences in historical data availability.

While the surge in retail interest is undeniable, institutional investors also clearly recognize the value of Bitcoin ETFs, contributing to their record-breaking growth. 

What is a spot crypto ETF?

A spot crypto ETF tracks the price of a specific crypto and invests portfolio funds into that crypto. These funds are traded on public exchanges but generally track a particular crypto. Like similar funds, crypto ETFs are on regular stock exchanges, and investors can keep them in their standard brokerage accounts.

“ETFs are wonderful, in that they can be held by institutions and retail investors alike,” Hougan posted to X. “But don’t let the historic adoption of bitcoin ETFs by retail fool you. They are also gaining institutional traction faster than any other ETF in history.”