Wall Street financial giants are increasingly embracing the bitcoin (BTC) market through exchange-traded funds (ETFs). Institutional adoption of bitcoin ETFs is not only booming and far from mere speculation, but is supported by solid data revealing growing institutional interest in the digital asset most popular. This was explained by Matt Hougan, director of investments in digital assets at the firm Bitwise. According to the executive, institutional investors are embracing bitcoin ETFs faster than any other ETF in historydisproving the belief that it is just a retail-driven phenomenon. The data confirms that since its launch in January this year, Bitcoin ETFs have attracted $17.5 billion in net inflowsfar surpassing the previous record set by the QQQ ETF (which tracks the Nasdaq 100 index) launched in 1999. By 2000, QQQ had raised $10 billion.
Net flows into bitcoin ETFs. Source: Farside. The QQQ fund, managed by Invesco, includes the 100 largest non-financial companies listed on the NASDAQ. Despite its success, the speed at which bitcoin-based funds are raising money dwarfs it.
Criticism of bitcoin ETFs is not lacking
However, This record growth has failed to silence criticswho argue that much of the flow is coming from retail buyers, rather than institutions, Hougan says. As evidence, they point to Form 13Fs, which are quarterly reports filed with the U.S. Securities and Exchange Commission (SEC) by institutional investors managing portfolios exceeding $100 million. According to the most recent data from the second quarter of 2024, Institutions own only 21% of assets under management in bitcoin ETFswhile the remaining 79% is held by retail investors. At first glance, this might seem unfavorable, he notes. However, when comparing institutional adoption of bitcoin ETFs to other fast-growing ETFs, a different trend is revealed. Hougan examined institutional ownership of the 10 fastest-growing new ETFs of all time, seen in the following figure. Taking into account the number of institutional holders and total assets under institutional management after two quarters on the market.
10 Fastest-Growing New ETFs of All Time. Source: Matt Hougan. “Bitcoin ETFs are by far the leaders in terms of institutional adoption. This is true whether you measure it by number of institutions or by assets under management.” The only comparable ETF is QQQ, but the comparison is not entirely appropriate, given that QQQ was launched in March 1999 in a very different context, says the Bitwise executive. It should be noted that Bitwise is one of 11 approved ETFs in the United Statesas reported by BitcoinDynamic. The fund currently holds 37,611 BTC, valued at $2.3 billion. This puts the Bitwise Bitcoin ETF (BITB) in fifth place among the ETFs with the largest assets under management, behind the ARK 21Shares Bitcoin ETF (ARKB). The real “problem,” according to Hougan, is that retail adoption of bitcoin ETFs “is so large that it makes institutional adoption look small in comparison.” However, Bitcoin ETFs are gaining traction among institutions faster than any other ETF in historyhighlighting the growing interest and legitimacy that bitcoin is gaining in the financial world.