More than half of the top U.S. hedge funds have disclosed exposure to a newly launched spot bitcoin (BTC) exchange-traded fund (ETF) in just over a year, as BTC/USD has significantly outperformed major stocks and indices.
One hedge fund invested 2.5% of its portfolio in Bitcoin.
According to data from investment firm River, 13 of the top 25 U.S. hedge funds held Bitcoin ETFs by the end of Q1 2024. Notable among them was Millennium Management, which held 27,263 BTC, worth $1.69 billion, or about 2.5% of its $67.7 billion in assets under management.
Other major players include Schonfeld Strategic Advisors with 6,734 BTC and Point72 Asset Management with 1,089 BTC. Meanwhile, some top hedge funds such as Bridgewater Associates, AQR Capital Management, and Balyasny Asset Management have yet to invest in a Bitcoin ETF.
Interestingly, the increased adoption of Bitcoin coincides with the increase in cash holdings across U.S. corporations. Specifically, according to an analysis by financial advisory firm Carfang Group, corporate cash or cash equivalents hit a record high of $4.11 trillion in the first quarter of 2024.
Some companies, including Reddit, Semler Scientific, JPMorgan, and Wells Fargo, have allocated a portion of their cash holdings to Bitcoin or Bitcoin ETFs.
This trend shows that U.S. companies, including hedge funds and traditional corporations, are becoming more confident in using Bitcoin as a means of diversification and hedging against traditional market risks.
Bitcoin to outperform Apple, Tesla stocks in 2024
Bitcoin is gaining traction on Wall Street as the cryptocurrency outperforms major stocks and stock indexes.
In particular, BTC returns in the first half of 2024 were around 94%. In comparison, the US benchmark S&P 500 index rose 23%, and the Dow Jones Industrial Average grew 14% over the same period.
Even Apple and Tesla stocks have underperformed Bitcoin, with returns of 10% and -29% since the start of the year, respectively. However, Nvidia, which recently became the world’s most valuable publicly traded company, has outperformed Bitcoin, rising more than 150% in the first half of 2024 on the back of the ongoing AI boom.
Related: 63 U.S. Banks on the Verge of Failure: Why Bitcoin’s Next Target Is $100,000
Veteran trader Peter Brandt sees Bitcoin becoming more relevant as a hedge asset, especially against traditional safe haven assets like gold. He says BTC’s market cap could rise 230% over gold by 2025.
Earlier this year, ARK Invest’s annual research report concluded that institutional portfolios aiming to maximize risk-adjusted returns should allocate 19.4% of their assets to Bitcoin by 2023.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.