Crypto

Millennium, Point72, Citadel Dive Into Bitcoin ETFs

Institutional giants like Millennium, Point72, and Citadel lead a significant shift into Bitcoin ETFs, marking a new era of digital asset investment.

By Alex P. Chase

5/16, 14:08 EDT
Bitcoin / U.S. dollar
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Key Takeaway

  • Hedge funds like Millennium Management and Point72, alongside pension funds and banks, are investing in Bitcoin ETFs, signaling Wall Street's growing interest.
  • BlackRock’s iShares Bitcoin Trust (IBIT) leads with 420 firms holding shares; overall, around 1,000 filers reported owning Bitcoin ETFs.
  • The diverse reasons for investment include testing the waters on ownership and diversification strategies amidst high market demand.

Institutional Embrace of Bitcoin ETFs

The landscape of cryptocurrency investment has undergone a significant transformation, as evidenced by the latest filings with the U.S. Securities and Exchange Commission (SEC). These filings reveal that not only retail traders but also major institutional players such as hedge funds, pension funds, and banks have made substantial allocations into spot bitcoin exchange-traded funds (ETFs). Among the notable investors are Millennium Management, which held approximately $2 billion worth of shares across several Bitcoin ETFs, and other prominent firms like Steven Cohen’s Point72 Asset Management, Elliott Investment Management, and Citadel Advisors. The State of Wisconsin Investment Board and the Bank of Montreal, along with firms from diverse geographies including Hong Kong, the Cayman Islands, Puerto Rico, and Switzerland, have also participated. This broad institutional engagement underscores a pivotal moment in the acceptance of digital assets by traditional financial entities, with roughly 1,000 filers holding shares in the ETFs by the end of the first quarter of 2024.

Bitcoin Stability Amid Market Volatility

In a market environment where meme stocks such as GameStop and AMC have experienced surges of over 160%, Bitcoin has showcased remarkable stability, with only a minor 0.1% decrease. This stability is particularly noteworthy given the historical parallel rallies of meme stocks and Bitcoin in 2021. The current economic backdrop, highlighted by stronger U.S. producer price data, suggests a rangebound trajectory for Bitcoin. This contrasts sharply with the speculative fervor surrounding meme stocks, indicating a maturation in Bitcoin's market perception and its evolving role within the broader financial landscape.

The Evolution of Bitcoin's Market Perception

The introduction of Bitcoin ETFs in the U.S. has significantly contributed to the evolution of Bitcoin's market perception. Transitioning from its previous association with speculative meme stocks, Bitcoin is now recognized as a credible investment asset. This shift has attracted a broader base of investors, encompassing both retail and institutional participants. The growth of Bitcoin ETFs, such as BlackRock’s iShares Bitcoin Trust (IBIT), Fidelity Wise Origin Bitcoin Fund (FBTC), and Grayscale’s Bitcoin Trust (GBTC), has been deemed a success, with IBIT and FBTC attracting substantial inflows and GBTC holding a market value of around $8.4 billion. This expansion in investor base is likely to continue, as many funds and platforms are still in the process of due diligence and onboarding. The market's perception of Bitcoin is further reinforced by its stability amid market volatility and the increasing credibility among investors.

Street Views

  • Stephane Ouellette, FRNT Financial (Neutral on Bitcoin ETFs):

    "The 13F releases show that the growth of Bitcoin ETFs can’t just be attributed to retail traders buying in brokerage accounts. But clearly portfolio managers, institutional investors and banks have at least begun to test the waters on ownership."

  • Matt Hougan, Bitwise Asset Management (Neutral on Bitcoin ETFs):

    "We often see professionals make a small personal allocation before allocating on behalf of clients. They want to test things out before exposing their investors."

  • Noelle Acheson, Author of Crypto Is Macro Now newsletter (Neutral on Bitcoin ETFs):

    "This is likely to continue to expand, as investment allocations of new assets often take place in stages, and many funds/platforms are still working on due diligence and onboarding. Plus, investment interest will again pick up when the market does – it has been directionless for a few weeks."

Management Quotes

  • Ben Brocker, Investment Strategist at Legacy Wealth:

    "Like everybody else, we were huge skeptics for years on Bitcoin, and then eventually we discovered a few things about it... We believe it’s a better monetary asset than gold for this digital age that we’re in. It’s mistakenly compared against other cash-flow investment assets like bonds, real estate or stocks. But I really think it needs to be viewed as a monetary asset."

  • Chad Koehn, CEO at United Capital Management:

    "Why are we bullish on Bitcoin? The answer lies in the innovative ledger technology of Web3... As for the competition mocking me, it doesn’t bother me at all. I think they’re naive to how rapidly digital ledger technology is revolutionizing business transactions and how important digital asset classes are as a hedge on inflation and the debasement of currency."