Institutional interest in U.S. spot Bitcoin ETFs has cooled for the first time since their much-hyped launch, but the story of Bitcoin adoption is far from over. While hedge funds and large asset managers are trimming their ETF positions, a new wave of corporate players is stepping in—this time by holding Bitcoin directly on their balance sheets.
Institutional Bitcoin ETF Holdings Drop for the First Time
According to recent 13F filings, institutional investors’ exposure to Bitcoin ETFs fell sharply in Q1 2025, dropping 23% from $27.4 billion at the end of 2024 to $21.2 billion by March 2025 1 2 3 4. This marks the first quarterly decline since spot Bitcoin ETFs debuted in January 2024. The pullback was driven by a combination of factors:
• Profit-taking: Many hedge funds and fast-money managers exited positions as the once-lucrative “basis trade”—buying spot ETFs and shorting futures—lost its edge. The annualized premium on CME Bitcoin futures, which had incentivized these trades, collapsed from around 15% to nearly zero by the end of Q1.
• Market correction: Bitcoin’s price itself fell 11% over the quarter, amplifying the decline in ETF assets under management 2 4.
• Strategic shifts: Some large funds, like Millennium Management and the State of Wisconsin Investment Board, made headlines by slashing or exiting their ETF positions entirely.
Not All Institutions Are Pulling Back
Despite the overall decline, some long-term allocators are bucking the trend. For example, Abu Dhabi’s Mubadala sovereign wealth fund increased its stake in BlackRock’s iShares Bitcoin Trust (IBIT) to 8.7 million shares, worth an estimated $409 million. University endowments and other sovereign entities also made modest new entries 1.
Financial advisers, in particular, slightly increased their Bitcoin ETF holdings, signaling a shift toward longer-term, savings-focused strategies rather than short-term trading.
Corporates Turn to Direct Bitcoin Holdings
While ETF flows have softened, public companies are showing growing interest in holding Bitcoin directly as a strategic reserve. Firms like Trump Media Group and GameStop have announced plans to add Bitcoin to their balance sheets, bypassing ETFs in favor of direct ownership. This move reflects a broader trend of corporates seeking more control and transparency over their crypto assets.
ETF Flows Remain Substantial, but Growth Slows
Despite recent outflows—such as the $278 million net outflow from U.S. spot Bitcoin ETFs on June 5—total assets across all Bitcoin ETFs remain robust, with over $120 billion in combined assets under management. Year-to-date net inflows still stand at $9 billion, though the pace has clearly slowed compared to the initial surge after launch.
What’s Next?
The current data suggests a maturing market: the initial wave of arbitrage-driven inflows is giving way to a more diverse investor base, including corporates and long-term allocators. The next round of 13F filings in July will offer more insight into whether this shift continues.
