Asset Managers Increase Bitcoin ETF Allocations as Cryptocurrency Soars

Overview of Investment Trends

In a significant turn for the cryptocurrency market, asset managers, including hedge funds, pension funds, and wealth management companies, increased their investments in U.S. exchange-traded funds (ETFs) linked to bitcoin. This activity coincided with a remarkable surge in bitcoin prices, which rose by 47% during the fourth quarter of 2024. Recent regulatory filings have illuminated these shifts in investment strategies, revealing a growing confidence in bitcoin as a legitimate asset class.

Surge in Bitcoin ETF Investments

The State of Wisconsin Investment Board reported substantial growth in its bitcoin ETF holdings in its quarterly filings with the Securities and Exchange Commission (SEC). By the end of December 2024, the board’s investments in the iShares Bitcoin Trust ETF exceeded 6 million shares, more than doubling its previous holdings over the last three months of the year.

Notably, the iShares Bitcoin Trust ETF has emerged as one of the leading funds in the market, accumulating more than $55 billion in assets since its launch in January 2024. The Wisconsin fund was among the first to report investment in bitcoin ETFs, marking a pivotal point in institutional adoption of cryptocurrency.

Major Players Join the Bitcoin ETF Market

Several prominent investment firms have also increased their stakes in bitcoin ETFs over the last quarter. Tudor Investment Corp, a systematic hedge fund manager, heightened its investments in the iShares ETF from 4.4 million shares to 8 million shares, with the total value of its holdings reaching approximately $426.9 million, up from $159.9 million at the end of September 2024. However, Tudor was unavailable for comment regarding its latest investment strategies.

The Abu Dhabi-based Mubadala Investment Co. made headlines by entering the bitcoin ETF space for the first time, acquiring an 8.2 million share stake in the iShares ETF, valued at $436.9 million. This move reflects growing global interest from sovereign wealth funds in cryptocurrency investments.

Hunting Hill Capital, initially absent from the bitcoin ETF market, re-established itself as a key player by acquiring positions worth around $131 million by the close of the year. Adam Guren, the firm’s founder and chief investment officer, noted that their trading strategies in the broader crypto ETF market had evolved, and timing nuances influenced their filings.

Diverse Strategies Among Financial Firms

Multiple financial advisory firms have also joined the trend of increasing allocations to bitcoin ETFs. Firms such as Cetera Advisors and NewEdge Advisers have enhanced their portfolios by buying into a variety of bitcoin-related financial products offered by established firms including Fidelity, ARK Investments, and Invesco.

Conversely, some investors have opted for more strategic approaches. Jack Ablin, the chief investment officer at Cresset Asset Management, highlighted the firm’s focus on ETFs with lower fees, remarking on the potential benefits of collar strategies. This strategy allows investors to minimize downside risk while still participating in potential upside gains.

Conclusion

The surge in asset manager allocations to bitcoin ETFs in late 2024 underscores a growing acceptance of cryptocurrency as a viable investment option. As institutional players adjust their strategies and diversify their portfolios with bitcoin-linked assets, the landscape of cryptocurrency investing continues to evolve, reflecting broader market trends and investor sentiment moving forward.