Institutional allocations to spot Bitcoin ETFs declined for the first time since their introduction, according to Q1 2025 13F filings. However, corporate Bitcoin ownership shows little sign of declining overall.
The data marks a shift from the strong initial inflows that followed the funds’ January 2024 launch, as hedge funds reduced exposure and the futures-based arbitrage trade that initially fueled demand began to unwind.
Institutional crypto ETF allocation declines
Millennium Management, previously among the largest institutional holders of iShares Bitcoin Trust (IBIT), slashed its position by 41% and exited its stake in the Invesco Galaxy Bitcoin ETF (BTCO). Brevan Howard also cut its exposure, while the State of Wisconsin Investment Board sold its entire 6 million-share position in IBIT.
These moves were consistent with the collapse of the BTC futures basis trade, which had enabled arbitrage-driven strategies that became less profitable by late March.
The annualized premium in CME futures over spot prices, which incentivized long spot ETF and short futures pairings, fell from around 15% earlier in the year to near zero by the end of Q1.
Despite the retrenchment among fast-money managers, other long-term allocators initiated or increased positions during the same period. Abu Dhabi’s Mubadala sovereign wealth fund boosted its IBIT stake to 8.7 million shares, estimated at $409 million.
Brown University added a $4.9 million position, and filings also showed modest entries from various endowments and sovereign entities.
The cooling institutional interest aligned with the daily ETF flow data. On June 5, U.S. spot Bitcoin ETFs posted net outflows of $278 million, marking the fourth day of outflows in the past week.
The softness in institutional holdings does not appear to have affected flows, with year-to-date net inflows totaling $9 billion, against more than $44 billion in net inflows since launch.
That basis trade, widely popular during the ETFs’ early months, became compressed by increased participation and more efficient markets, limiting its appeal to leveraged players.
13F filings don’t tell the whole picture
While 13F filings only provide a partial snapshot, covering U.S.-based firms managing over $100 million, they offer insight into the shifting nature of ETF exposure. Importantly, they do not capture offshore flows or smaller advisors, and may understate longer-term interest still building beneath the surface.
Some exposure will also shift from ETFs to other instruments, such as CME futures or over-the-counter swap structures, which are not visible in these disclosures.
Further, public companies are increasingly exploring holding Bitcoin directly on their balance sheets in the form of a strategic reserve. Trump Media Group and GameStop, for example, are committed to direct holding of the the top digital asset rather than purchasing via one of the Newborn Nine ETFs.
The total assets across the Bitcoin ETF ecosystem remain substantial, with over $120 billion in combined AUM. Still, the evolving investor mix suggests the fast early growth driven by arbitrage-driven funds may not be sustained at the same pace.
Q1’s data marks the first clear deceleration in the Bitcoin ETF era, with hedge-fund allocations falling as market conditions shift and short-term strategies unwind.
The next 13F cycle in July will provide a clearer picture of whether longer-horizon allocators continue to step in to fill the gap left by arbitrage-driven trades.
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