The smart money is currently divided on Bitcoin. While hedge funds pulled out, liquidating 31,400 BTC worth of spot Bitcoin ETF holdings in the first quarter, banks took a different approach, adding 7,800 BTC and increasing their stakes significantly. This data comes from CoinShares’ analysis of the 13F filings for Q1 2026, which shows mandatory disclosures by professional investors with more than $100 million in assets under management to the SEC.
#What is the Current Status of Institutional Holdings?
Institutional holdings in U.S. spot Bitcoin ETFs dropped substantially from 313,000 BTC to 261,000 BTC over the quarter. This represents a sharp 17% decline, equivalent to approximately 52,500 BTC that left the market. When viewed in dollar terms, the situation appears even more severe. The total value of these holdings plummeted by 35%, settling at $17.8 billion. This drop resulted from a combination of actual selling and Bitcoin’s price falling by around 22% during this period.
Most of the reduction in holdings stemmed from two primary categories: hedge funds, which reduced their positions by 39% or 31,400 BTC, and brokerages, which cut their stakes by 53%, representing a reduction of 18,800 BTC. Together, these two groups were responsible for about 96% of the total institutional sell-off.
Investment advisors, the largest group based on holdings, showed resilience during this period, cutting their positions by a mere 5.9% and maintaining a base level of 150,300 BTC.
In contrast, banks, such as JPMorgan and Wells Fargo, increased their investments significantly. JPMorgan added about 3,000 BTC to its ETF holdings, while Wells Fargo expanded its stake by roughly 4,000 BTC. Overall, the banking sector’s total positions surged over 15,200 BTC, effectively more than doubling at the quarter's end.
#Why is This Divergence Significant?
Understanding this split in behavior among institutional players is essential. During times of market downturns, leveraged strategies typically unwind. This doesn't mean assets disappear; instead, they shift from risk-prone holders to more stable entities like banks and investment advisors.
Many hedge funds are not betting on Bitcoin price increases but are using a strategy involving basis trades. They purchase spot ETFs while simultaneously shorting Bitcoin futures to capture the profit from any spread. However, when market volatility increases and that spread diminishes, the strategy loses effectiveness, prompting funds to exit.
The 35% decline in the dollar value of institutional ETF holdings, dropping from roughly $27.4 billion to $17.8 billion, also needs further context. A considerable part of this drop was due to Bitcoin's price decline rather than active selling. The actual reduction of BTC assets was 17%, indicating that the price drop greatly exaggerated the exit's impact.