Bitwise CIO Celebrates BTC ETFs and Bullish 13F Filings

This week’s 13F filing provided insight into who is purchasing spot Bitcoin ETFs and the magnitude of their investments. Bitwise Chief Investment Officer Matt Hougan highlighted the success of these ETFs, but he also pointed out a crucial detail that the media might miss, which makes him even more optimistic about Bitcoin ETFs. According to Hougan, 563 professional investment firms have reported holding a combined value of $3.5 billion in Bitcoin ETFs. He predicts that these figures could eventually exceed 700 firms, with total assets under management approaching $5 billion.

Hougan’s prediction was remarkably accurate, as the latest data from K33 Research indicates that over 900 firms have disclosed their spot Bitcoin ETF holdings. Ventle Lunde, a senior analyst at K33 Research, shared a chart on May 16, noting that 937 professional firms were invested in U.S. spot ETFs as of March 31. In comparison, gold ETFs had only 95 professional firms invested in their first quarter.

Bloomberg Senior ETF analyst Eric Balchunas observed that the largest ETFs have garnered the most institutional capital, with BlackRock’s IBIT attracting more than 400 holders. Hougan termed this a “huge success,” stating, “This is absolutely massive. For any financial advisor, family office, or institution wondering if they were the only one considering Bitcoin exposure, the answer is clear: You are not alone.”

Hougan also noted that professional investors manage over $50 billion in assets but own just 7-10% of the total investment in Bitcoin ETFs. K33 Research data slightly revises this figure to 18%. Lunde’s post explained that retail investors own the majority of the float, while professional investors held $11.06 billion, representing 18.7% of the Bitcoin ETF assets under management (AUM) by the end of Q1.

Despite these numbers, Hougan argued that the media’s portrayal of Bitcoin ETFs as “retail-driven” funds might miss an important emerging trend. This oversight leaves him “incredibly bullish,” based on the initial 13F filings. The Bitwise CIO outlined a four-step investment trajectory commonly observed among institutions. The first step involves a due diligence period, lasting 6-12 months, where investments are thoroughly evaluated.

The second step sees professionals making a small personal allocation. Following this, they expose their investors to the market in the third step. Eventually, this process leads to more substantial platform-wide allocations across the entire client base, typically ranging from 1-5% of the portfolio, about six months after the initial allocation.

Hougan emphasized that the allocations seen in the recent 13F filings are just the beginning. As an example, he mentioned Hightower Advisors, whose current spot Bitcoin ETF allocation is just 0.05% of its assets. If they follow the typical four-step investment process, a 1% allocation would amount to $1.2 billion from a single firm.

Hougan concluded that by multiplying this potential by the growing number of professional investors entering the Bitcoin ETF space, one can understand the basis for his enthusiasm. The current trends suggest a promising future for Bitcoin ETFs as more firms complete their due diligence process and make more substantial investments.