16-5-2025 – The opening months of 2025 have witnessed a marked shift in the landscape of spot Bitcoin exchange-traded funds (ETFs), as major asset managers scaled back their investments amid a turbulent market. Regulatory filings submitted to the US SEC reveal that this retreat follows a 12% decline in Bitcoin’s price, coupled with shrinking returns from related trading strategies, prompting a more cautious approach among investors.
Hedge funds have been at the forefront of this pullback. Millennium Management, the largest hedge fund in the United States, slashed its stake in BlackRock’s iShares Bitcoin Trust ETF (IBIT) by a significant 41%, leaving it with 17.6 million shares. The firm also completely divested its position in the Invesco Galaxy Bitcoin ETF. However, in a strategic pivot, Millennium bolstered its investments in two smaller funds—the ARK 21Shares Bitcoin ETF and the Grayscale Bitcoin Mini Trust—potentially reflecting a preference for funds with more favourable fee structures or performance metrics. Similarly, Jersey-based Brevan Howard reduced its IBIT holdings by 15.6% over the same period, mirroring the broader trend of recalibration among hedge funds. This shift was partly driven by a sharp drop in the premium on Bitcoin futures compared to spot prices, as market speculation pointed to an overestimation of demand.
Public pension funds have also reassessed their exposure. The State of Wisconsin Investment Board (SWIB), an early adopter of spot Bitcoin ETFs in 2024, sold off its entire 6 million-share position in IBIT during the first quarter of 2025. Meanwhile, a surprising new player emerged in the crypto investment sphere: Brown University. The Ivy League institution made its debut in digital assets by acquiring $4.9 million worth of IBIT shares, as disclosed in a filing dated 31 March. This move aligns with a growing trend among educational endowments to diversify portfolios and mitigate risk through exposure to cryptocurrencies.
Despite the cooling enthusiasm, some long-term institutional players remain optimistic. Abu Dhabi’s Mubadala Investment Company, a sovereign wealth fund, increased its Bitcoin holdings, now owning 8.7 million IBIT shares valued at $408.5 million. This suggests that certain institutions still view Bitcoin as a viable asset class, even amidst short-term volatility.
On the other hand, financial advisers and wealth managers are showing tentative but growing interest. Hightower Advisors, for instance, reported holdings of approximately $68 million across various Bitcoin funds, reflecting a long-standing ambition to offer clients regulated avenues for digital asset investment. Matt Hougan of Bitwise described this as a slow but transformative trend, noting that the gradual entry of financial advisory firms could signal a second wave of adoption. While the initial frenzy surrounding spot Bitcoin ETFs has subsided, Hougan believes this steady momentum from advisers and retail investors is only just beginning to take shape.
Yet, the market has not been without its challenges. In early May, BlackRock’s IBIT recorded its largest-ever single-day outflow, losing over $36 million in one trading session—a stark indicator of waning global interest in cryptocurrencies amid heightened regulatory scrutiny. Nevertheless, the total assets under management in US-listed spot Bitcoin ETFs still stand at over $40 billion, underscoring that while institutional appetite may be tempering, it remains far from extinguished.
