In the first quarter of 2025, leading asset managers significantly reduced their holdings in spot Bitcoin exchange-traded funds (ETFs).
According to new regulatory filings with the US SEC, this move is in response to a 12% drop in Bitcoin’s price and diminishing profitability in associated trading strategies.
The shift represents a cautious pivot of investor sentiment, especially given the deluge of enthusiasm analysts and investors greeted these ETFs with when they debuted in January 2024.
Hedge funds led the retreat, with Millennium Management—the largest hedge fund in the U.S., cutting its exposure to BlackRock’s iShares Bitcoin Trust ETF (IBIT) by 41%. The firm now owns 17.6 million shares. It also fully exited its stake in the Invesco Galaxy Bitcoin ETF.
At the same time, Millennium added to its holdings in two smaller funds, the ARK 21Shares Bitcoin ETF and the Grayscale Bitcoin Mini Trust. This may indicate a changed strategy toward funds with different fee structures or performance profiles.
Brevan Howard, based in Jersey, did the same. It trimmed its IBIT holdings by about 15.6% during the same period.
Hedge funds were responding to a crash in the premium on Bitcoin futures over spot prices, which collapsed as traders bet that several factors were exaggerating demand.
Institutional investors shift their Bitcoin ETF holdings
Not only hedge funds — public pension funds, too, re-evaluated their stakes. State of Wisconsin Investment Board (SWIB), among the first institutional investors to buy spot Bitcoin ETFs, sold the whole of its 6 million shares position in IBIT in Q1 2025. That followed a huge bet on Bitcoin in early 2024.
In contrast, Brown University quietly entered the crypto investment space with a surprising move, purchasing approximately $4.9 million worth of shares in BlackRock’s iShares Bitcoin Trust (IBIT), according to a filing dated March 31. The Ivy League institution joins a growing number of educational endowments exploring digital assets as part of broader portfolio diversification and risk mitigation strategies.
Meanwhile, sovereign wealth funds are a fickle source. Mubadala Investment Company in Abu Dhabi increased its Bitcoin holdings. It now holds over 8.7 million IBIT shares, worth $408.5 million. This indicates that a few long-term institutions still see Bitcoin as an asset class, even through short-term fluctuation.
Financial advisors signal continued interest
As hedge funds retreat, other classes of investors are slowly moving in. Some financial advisers and wealth managers held or added a bit to their spot Bitcoin ETF exposure in Q1.
Hightower Advisors, for one, announced combined holdings of roughly $68 million in various Bitcoin funds. The firm has also hinted for years at the desire to provide clients with a way to invest in digital assets through regulated products such as an ETF.
Matt Hougan of Bitwise thinks this could be a gradual but transformational move.
He said that what he would be looking for most is whether, once all the data is available, more financial advisory firms begin to enter the market. He added that the wave of adoption is a slow-moving train, but it is steadily gaining momentum.
That shift in direction indicates that while the first wave of whirlwind excitement around spot Bitcoin ETFs wanes, that second wave (from advisors and retail) is still just getting started.
This stance feels justified in the light of recent data. In early May, BlackRock’s IBIT is said to have seen the highest single-day outflows ever reported. The fund lost over $36 million in a single trading session.
That was one of the largest daily outflows since the ETF’s inception and came as global regulatory attention and interest in crypto coins continued to wane.
Nevertheless, the total AUM in all US-listed spot Bitcoin ETFs remains at over $40 billion—indicating that institutional interest, although cooling, is not disappearing.
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