Bitcoin fund holdings explode amid institutional crypto hype

Institutional interest in Bitcoin (BTC) has been on the rise after a wave of applications by prominent Wall Street firms seeking to launch a spot Bitcoin exchange-traded fund (ETF). 

This development indicates a growing acceptance of cryptocurrencies among traditional financial (TradFi) institutions, potentially paving the way for increased mainstream adoption of Bitcoin and injecting further legitimacy into the crypto market.

As of July 7, the number of BTC held by funds increased substantially since the first spot Bitcoin ETF filing by BlackRock (NYSE: BLK) on June 15, according to data by finance research platform ByteTree.

In particular, Bitcoin fund holdings have skyrocketed to nearly 850,000 BTC, from a 3-month low of around 830,000 on June 14 – a day before BlackRock unveiled its application – marking a noteworthy increase of 2.5%. 

The latest spike propels the number of BTC held by funds to the highest point in 6 months, exceeding the previous peak of more than 846,000 reached in February 2023. 

Spot bitcoin ETF “could be the largest, if not one of the largest, launches in history.”

Weighing on the prospects of the potential impact of a spot Bitcoin ETF rollout, Bloomberg Intelligence analyst James Seyffart believes that if approved, the launch of such a product “could be the largest, if not one of the largest, launches in history,” he said during an ETF Prime podcast on July 5.

The expert’s comments come as he believes that an approved BTC ETF could urge investors to reallocate billions of dollars worth of the leading cryptocurrency from Grayscale Investments’ Bitcoin Trust (GBTC), Canadian Bitcoin ETFs, and other funds. 

Seyffart said there are currently eight pending spot Bitcoin ETF filings, launched by well-known TradFi institutions such as Wisdomtree, Invesco, VanEck, and Valkyrie, among others. 

Last week, the US Securities and Exchange Commission (SEC) said the recently filed Bitcoin ETF applications were ‘inadequate,’ and not sufficiently clear and comprehensive. 

The world’s largest asset manager was quick to respond to SEC’s remarks and has refiled an application with the regulator after including additional details.