Despite 12% Bitcoin dip, Institutional Bitcoin ETF holdings rose by 14%

Institutional interest in Bitcoin exchange-traded funds (ETFs) surged by 14% in the second quarter of 2024, even as Bitcoin’s value dropped by 12% during the same period.

Matt Hougan, Chief Investment Officer at Bitwise, shared this positive trend in his latest report. He noted that despite the significant dip in Bitcoin’s price, institutional investors remained undeterred.

“The decline in Bitcoin’s value did not drive institutions away; in fact, their commitment grew stronger,” Hougan remarked.

The rise in institutional involvement is particularly striking. The number of institutional investors in Bitcoin ETFs increased from 965 to 1,100, representing a notable 14% growth.

These investors now manage 21.15% of the total assets in Bitcoin ETFs, up from 18.74% in the previous quarter. By the end of Q2, institutional investments in Bitcoin ETFs had reached $11 billion.

This growth is reminiscent of early trends seen with traditional ETFs.

Hougan compared the rapid uptake of Bitcoin ETFs to the early growth of Invesco’s QQQ ETF, noting that Bitcoin ETFs have attracted three times as many institutional buyers in just two quarters.

Despite some exits—112 investors left their Bitcoin ETF positions—247 new firms entered the market, resulting in a net gain of 135 institutional investors.

Notably, Bitwise’s Bitcoin ETF, ranked fourth in assets under management, now has more institutional holders compared to SPDR’s GLD ETF at a similar stage of its development.

Looking ahead, Hougan predicts a continued increase in institutional exposure to Bitcoin. Currently, the average institutional portfolio allocates just 0.47% to Bitcoin, but this is expected to rise to over 1% within a year.

Hougan anticipates that as momentum builds, institutional investment could eventually reach up to 5% of their portfolios.