Nandini Roy Choudhury, writer
Brief news
- Goldman Sachs had a strong performance in the second quarter, investing $418 million in bitcoin funds and holding a $238 million stake in BlackRock’s iShares Bitcoin Trust.
- Morgan Stanley reduced its investment in spot bitcoin ETFs from $270 million to around $189 million, primarily selling off shares in the Grayscale Bitcoin Trust.
- JPMorgan has a small amount of exposure to the cryptocurrency market, with approximately $42,000 invested in Grayscale’s bitcoin fund and an additional $18,000 invested in the ProShares Bitcoin Strategy ETF.
Detailed news
When the SEC allowed bitcoin exchange-traded funds to enter the mainstream in January, numerous traditional financial institutions on Wall Street and beyond were given the chance to invest in cryptocurrency. Since then, funds have been flowing in, albeit inconsistently.
On Wednesday, financial institutions and investment firms with significant assets were required to submit their second-quarter 13F reports. These reports provide insights into their investment activities, revealing what they have bought and sold during the three-month period.
Goldman Sachs had a strong performance in the quarter, while Morgan Stanley made adjustments to its cryptocurrency investments. JPMorgan has not yet made a significant impact.
There are plenty of opportunities available for firms that prefer a more cautious approach to entering the market. After a series of public ETF listings in January related to bitcoin, the Securities and Exchange Commission took an additional step last month. This move paved the way for spot ether ETFs, providing investors with the opportunity to access the second-largest cryptocurrency. The new holdings are expected to be reflected in the upcoming third-quarter reports.
During the months of March through June, Goldman Sachs entered the crypto ETF market by acquiring bitcoin funds worth $418 million. The largest holding in its portfolio is a $238 million stake in shares of BlackRock’s iShares Bitcoin Trust. The bank also holds investments in spot funds offered by Grayscale, Invesco, Fidelity, and other companies.
Morgan Stanley was the first major firm on Wall Street to authorize its 15,000 financial advisors to offer bitcoin ETFs to affluent clients with a net worth exceeding $1.5 million. The approved ETFs are those issued by BlackRock and Fidelity. Until now, wealth management businesses have only executed trades upon customer request for exposure to the new spot crypto funds.
Morgan Stanley recently revealed in its filing that it has reduced its investment in spot bitcoin ETFs from approximately $270 million to around $189 million. This adjustment is a part of the bank’s management of its $1.5 trillion in assets. Many of those reductions were a result of selling off the majority of its shares in the Grayscale Bitcoin Trust, which carries a significantly higher management fee compared to other ETFs. Most of the bank’s spot bitcoin holdings are now held through the iShares trust.
JP Morgan reported a small amount of exposure to the cryptocurrency market, with approximately $42,000 invested in Grayscale’s bitcoin fund and an additional $18,000 invested in the ProShares Bitcoin Strategy ETF. HSBC holds nearly $3.6 million worth of spot bitcoin, which comes from the fund issued by Ark 21Shares. UBS, on the other hand, has approximately $300,000 worth of spot bitcoin ETF holdings. Bank of America’s collective holdings amount to around $5.3 million, primarily from BlackRock and Fidelity.
It seems that the majority of banks primarily receive ETF flows from wealth management clients who are seeking exposure, rather than the banks themselves choosing to hold these assets on their balance sheets.
While investment banks on Wall Street are gradually entering the scene, hedge funds are adopting a more assertive strategy.
Millennium Management, with its impressive $62 billion portfolio, has made significant investments in multiple Bitcoin ETFs, totaling over $1.1 billion. Additionally, it has emerged as the leading shareholder in BlackRock’s bitcoin fund, holding shares valued at more than $371 million, as per its August filing.
The value of its shares has significantly decreased since its May filing. The stake in BlackRock’s fund has been reduced by about half, and the stake in Grayscale’s fund has been reduced by more than half.
Capula Investment Management, a prominent hedge fund in Europe, has revealed in a recent SEC filing that it has invested over $464 million in spot bitcoin ETFs. These investments include funds from renowned companies like BlackRock and Fidelity.
Point72 Asset Management and Apollo Management have also entered the market, along with firms like Citadel Advisors, Jane Street, and Fortress Investment Group.
Since its launch in January, spot bitcoin funds have experienced significant net flows of approximately $17.5 billion, resulting in a total asset value of $53.5 billion as of mid-August. Grayscale’s fund, which underwent a conversion to an ETF, has experienced a significant outflow of $19.4 billion since the transition. However, its newly introduced budget product has attracted net inflows of $274 million.
Ether ETFs currently have over $7.6 billion in holdings as of Tuesday. According to analysts from Barclays, there has been a decrease in trading volume for spot crypto ETF products in comparison to spot exchange volumes.
However, the recent surge in ETF activity has played a significant role in driving up the price of bitcoin, reaching an all-time high of over $73,000 in March. The price has experienced a significant decline, falling below $58,000, due to volatility in the broader markets. However, it has still managed to maintain a year-to-date increase of over 30%.
According to Galaxy Digital chief Mike Novogratz, the crypto markets are currently experiencing a strong sentiment shift, as he mentioned in an interview with CNBC in May. Cryptocurrency has now become recognized as a legitimate asset class. It will happen in the upcoming year and will have a lasting impact. And it was different two years ago. There was a level of risk associated with the asset class, and it has since been mitigated.
Source : CNBC News
