Investment advisors are rapidly adopting spot Bitcoin exchange-traded funds (ETFs) at a faster rate than any other ETF launched in recent history, according to Bitwise Chief Information Officer (CIO) Matt Hougan. Responding to a social media post by researcher Jim Bianco, Hougan analyzed BlackRock’s iShares Bitcoin Trust (IBIT) net flows related to investment advisors, which totaled $1.45 billion out of the total $46 billion in inflows from spot Bitcoin ETFs. Despite the relatively lower amount invested compared to other investors, Hougan stated that this makes IBIT the second fastest-growing ETF launched in 2024 out of over 300 funds.
Bloomberg senior ETF analyst Eric Balchunas supported Hougan’s assessment, confirming that the nearly $1.5 billion in advisor allocations represent “more organic inflows” than any other ETF launched this year. Bianco’s post was prompted by major outflows from US-traded spot Bitcoin ETFs registered last week, with the ETFs collectively losing $706 million, including $288 million in fleeing capital on Sept. 3. However, Balchunas noted that the outflows only represent 0.5% of Bitcoin ETFs’ total assets under management, which he considers to not be “too staggering.”
Balchunas further explained that the health of an ETF should be measured by tracking its flows rather than solely focusing on dollar-denominated assets under management, as the latter can shrink if the asset price decreases. He highlighted that Bitcoin ETFs have over 1,000 institutional holders after two 13F periods, which he described as “beyond unprecedented.” Currently, 20% of IBIT’s shares are held by institutions and large advisors, a number that Balchunas expects to increase to 40% within the next 12 months.
In conclusion, investment advisors are embracing Bitcoin ETFs at an unprecedented rate, with nearly $1.5 billion in advisor allocations representing significant organic inflows compared to other ETFs launched this year. Despite recent outflows from US-traded spot Bitcoin ETFs, experts believe that this is not a cause for concern, considering the overall size of the outflows relative to the total assets under management. The increasing institutional interest in Bitcoin ETFs further solidifies their position in the financial market, with expectations of continued growth in institutional holdings in the coming months.
