Key Takeaways
- • Nine hedge funds and banks, led by Millennium, Brevan Howard, Goldman Sachs and D.E. Shaw, sold about 68,000 bitcoin worth of spot Bitcoin ETF shares between the October 2025 high and the end of June 2026, roughly $5.4 billion at prevailing prices, according to Galaxy Research.
- • The exits were driven by arbitrage economics: the cash-and-carry spread fell from 7.9% annualized before the high to 4.8% by late October, and after fees and financing Galaxy's Alex Thorn estimates only about 1.5 percentage points above T-bill yields.
- • Morgan Stanley's wealth management arm, Mubadala and the Abu Dhabi Investment Council were among buyers, while roughly 2,200 other filers added about 20,000 bitcoin; since June, the same funds have added back about 87,000 bitcoin as directional buying.
- • Sub-filing investors such as advisers, family offices and retail holders cut holdings by only 6.6% while the price fell 49%.
- • Bitcoin ETFs drew $137M in net inflows on the latest session, flipping October to positive, though the month had been down $907M at the midpoint; ETH ETFs saw $21M in outflows.
Summary
According to a Galaxy Research report published Monday, nine hedge funds and banks cut a combined 68,000 bitcoin worth of spot Bitcoin ETF exposure between the October 2025 high and the end of June 2026, based on quarterly SEC filings. Millennium, Brevan Howard, Goldman Sachs, D.E. Shaw and five other institutions led the reduction, with some trimming by about a third and others exiting entirely.
The trade was a cash-and-carry arbitrage rather than a directional view on bitcoin: managers held the ETF long while shorting bitcoin futures, capturing the spread between the two prices as long as it exceeded Treasury bill yields. Before the high, that spread paid 7.9% annualized, 3.9 points above T-bills. By late October it had compressed to 4.8%, and after fees and financing Galaxy's Alex Thorn estimates the residual advantage at about 1.5 points. CFTC data cited by Decrypt shows asset managers' net long CME bitcoin futures fell 57% from the all-time-high week, with open interest down 28%.
On the buy side, Morgan Stanley's wealth management arm, Mubadala and the Abu Dhabi Investment Council were among the sovereign and wealth buyers, while roughly 2,200 other filers added about 20,000 bitcoin. Smaller investors who do not file, including advisers, family offices and retail holders, reduced holdings by just 6.6% while bitcoin's price fell 49%. Since June, the hedge funds have added back about 87,000 bitcoin, this time as outright long exposure.
Macro conditions also shifted. The Federal Reserve held rates at 3.75%–4.00% in a 10-2 vote, with both dissenters favoring another quarter-point hike. Market pricing for two hikes by year-end, which stood at 59% a month earlier, has fallen to zero, according to the report. Bitcoin traded near $80,100 (down about 1.4%) on the day, with ETH at roughly $2,320 and SOL near $100. Bitcoin ETFs recorded $137M in net inflows on Wednesday, bringing October to a flat position after $724M arrived in the final eight sessions, while ETH ETFs posted $21M in outflows.
The trade was a cash-and-carry arbitrage rather than a directional view on bitcoin: managers held the ETF long while shorting bitcoin futures, capturing the spread between the two prices as long as it exceeded Treasury bill yields. Before the high, that spread paid 7.9% annualized, 3.9 points above T-bills. By late October it had compressed to 4.8%, and after fees and financing Galaxy's Alex Thorn estimates the residual advantage at about 1.5 points. CFTC data cited by Decrypt shows asset managers' net long CME bitcoin futures fell 57% from the all-time-high week, with open interest down 28%.
On the buy side, Morgan Stanley's wealth management arm, Mubadala and the Abu Dhabi Investment Council were among the sovereign and wealth buyers, while roughly 2,200 other filers added about 20,000 bitcoin. Smaller investors who do not file, including advisers, family offices and retail holders, reduced holdings by just 6.6% while bitcoin's price fell 49%. Since June, the hedge funds have added back about 87,000 bitcoin, this time as outright long exposure.
Macro conditions also shifted. The Federal Reserve held rates at 3.75%–4.00% in a 10-2 vote, with both dissenters favoring another quarter-point hike. Market pricing for two hikes by year-end, which stood at 59% a month earlier, has fallen to zero, according to the report. Bitcoin traded near $80,100 (down about 1.4%) on the day, with ETH at roughly $2,320 and SOL near $100. Bitcoin ETFs recorded $137M in net inflows on Wednesday, bringing October to a flat position after $724M arrived in the final eight sessions, while ETH ETFs posted $21M in outflows.
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