Leading asset managers significantly reduced their holdings in spot Bitcoin exchange-traded funds (ETFs)

In the first quarter of 2025, leading asset managers significantly reduced their holdings in spot Bitcoin exchange-traded funds (ETFs).

In the first quarter of 2025, several leading asset managers noticeably reduced their holdings in spot Bitcoin exchange-traded funds, a shift that follows a 12% decline in the cryptocurrency’s price and diminished profitability in associated trading strategies, according to regulatory filings.

The move, part of broader portfolio adjustments, diverges from the enthusiasm analysts and investors greeted these ETFs with when they debuted in January 2024.

After a period of rapid accumulation, hedge funds led the retreat. Among them, Millennium Management—the largest hedge fund in the U.S., known for its opportunistic trading style—cut its exposure to BlackRock’s iShares Bitcoin Trust ETF (IBIT) by 41%. The firm now owns 17.6 million shares. It also fully exited its stake in the Invesco Galaxy Bitcoin ETF.

At the same time, Millennium added to its holdings in two smaller funds, the ARK 21Shares Bitcoin ETF and the Grayscale Bitcoin Mini Trust. This may indicate a changed strategy toward funds with different fee structures or performance profiles.

Brevan Howard, based in Jersey, did the same. It trimmed its IBIT holdings by about 15.6% during the same period.

Together, hedge funds were responding to a crash in the premium on Bitcoin futures over spot prices, which collapsed as traders bet that several factors were exaggerating demand.

After U.S. pension funds, like State of Wisconsin Investment Board (SWIB), were among the first institutional investors to buy spot Bitcoin ETFs, they sold the whole of their 6 million shares position in IBIT in Q1 2025. That followed a huge bet on Bitcoin in early 2024.

In contrast, Brown University quietly entered the crypto investment space with a surprising move, purchasing approximately $4.9 million worth of shares in BlackRock’s iShares Bitcoin Trust (IBIT), according to a filing dated March 31. The Ivy League institution joins a growing number of educational endowments exploring digital assets as part of broader portfolio diversification and risk mitigation strategies.

Mubadala Investment Company in Abu Dhabi increased its Bitcoin holdings. It now holds over 8.7 million IBIT shares, worth $408.5 million. This indicates that a few long-term institutions still see Bitcoin as an asset class, even through short-term fluctuation.

As hedge funds retreat, other classes of investors are slowly moving in. Some financial advisers and wealth managers held or added a bit to their spot Bitcoin ETF exposure in Q1.

Hightower Advisors, for one, announced combined holdings of roughly $68 million in various Bitcoin funds. The firm has also hinted for years at the desire to provide clients with a way to invest in digital assets through regulated products such as an ETF.

That shift in direction indicates that while the first wave of whirlwind excitement around spot Bitcoin ETFs wanes, that second wave (from advisors and retail) is still just getting started.

This stance feels justified in the light of recent data. In early May, BlackRock’s IBIT is said to have seen the highest single-day outflows ever reported. The fund lost over $36 million in a single trading session.

That was one of the largest daily outflows since the ETF’s inception and came as global regulatory attention and interest in crypto coins continued to wane.

Nevertheless, the total AUM in all US-listed spot Bitcoin ETFs remains at over $40 billion—institutional interest, although cooling, is not disappearing.