Bitwise Chief Investment Officer Matt Hougan has lauded the success of spot Bitcoin ETFs, following the latest 13F filings. These filings disclosed the substantial interest and investment from professional firms, with Hougan noting that 563 firms reported owning a combined $3.5 billion worth of Bitcoin ETFs. He predicts this number could soon exceed 700 firms, with assets under management (AUM) approaching $5 billion.
Rising Numbers and Market Implications
Hougan’s prediction was confirmed as K33 Research revealed that over 900 firms have disclosed their spot Bitcoin ETF holdings. According to a May 16 post by K33 Research senior analyst Vetle Lunde, 937 professional firms were invested in U.S. spot ETFs as of March 31. In comparison, only 95 professional firms were invested in gold ETFs in their first quarter.
Bloomberg Senior ETF analyst Eric Balchunas observed that the largest ETFs, such as BlackRock’s IBIT, attracted significant institutional capital, with over 400 holders.
Professional vs. Retail Investment
Despite media claims that spot Bitcoin ETFs are predominantly retail-driven, Hougan highlighted a critical trend: professional investors are increasingly participating. He noted that while professional investors currently own just 7-10% of the total investment, K33 Research data indicates this share is 18%, with professional investors holding $11.06 billion by the end of Q1, representing 18.7% of the BTC ETF AUM.
Also Read: Ethereum’s DeFi Ecosystem: Bitwise Eyes Revolutionary ETP
Investment Trajectory and Future Growth
Hougan described a typical four-step investment process observed among institutions:
- Due Diligence: A 6-12 month evaluation period.
- Small Personal Allocation: Professionals make initial, personal investments.
- Client Exposure: Institutions gradually expose their investors to the market.
- Platform-Wide Allocation: Substantial investments across the entire client portfolio, typically ranging from 1-5% of the portfolio, about six months after the initial allocation.
Hougan emphasized that the current allocations reported in the 13F filings are likely just the beginning. For instance, Hightower Advisors’ current spot Bitcoin ETF allocation is a mere 0.05% of its assets. However, following the typical investment trajectory, this could grow to a 1% allocation, equating to $1.2 billion from Hightower alone.
