Coinbase’s weekly market report shows an encouraging sign of growing institutional interest in the digital asset, with an updated 13F filing for a U.S. spot Bitcoin exchange-traded fund (ETF).
“Despite Bitcoin’s underperformance, we believe the continued inflows into spot Bitcoin ETFs could be a promising indicator of continued interest in cryptocurrencies from the new pools of capital that ETFs are accessing,” Coinbase analysts David Duong and David Han said. ETFs make cryptocurrencies more accessible because they trade like traditional stocks on a stock exchange, meaning asset managers no longer need to buy Bitcoin directly to gain exposure.
Since 13F reports are only filed by companies with over $100 million in assets under management, they serve as an indicator of an institution’s level of interest and ownership in a particular asset. Analysts noted that interest in spot Bitcoin ETFs is expected to increase in the second quarter of 2024 compared to the first quarter when the first Bitcoin ETF was launched.
“A growing portion of this flow appears to be led by institutions, which increased their shareholding from 21.4% to 24.0%,” Coinbase analysts wrote in the report.
Increased inflow from investment advisors
The report highlighted an increase in institutional inflows into the “investment advisory” category. These advisors manage significant amounts of capital and often make decisions on asset allocation, investment strategies and specific securities purchases on behalf of their clients.
Duong and Han found that “the proportion of institutional investors classified as investment advisors increased from 29.8% to 36.6%, and from 6% to 9% of total stocks.”
Analysts say there were several notable new holders of bitcoin in the past quarter, including Goldman Sachs and Morgan Stanley, who are likely holding the digital asset on behalf of their clients. Goldman Sachs held about $418 million worth of U.S. spot bitcoin ETF shares as of June 30. According to the quarterly report, 13F Report With the United States This is the document filed by the Securities and Exchange Commission on Tuesday.
The report found that among institutions, hedge fund holdings of Bitcoin ETFs fell from 37.7% to 30.5%, but the decline could be a sign that these firms are trading on basis, as open interest in Bitcoin futures on the CME exchange rose 15% in the second quarter to $2.75 billion worth of shares.
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