Key Takeaways
- • Hedge funds and banks drove institutional selling of spot bitcoin ETFs, with nine named firms, including Millennium Management, Brevan Howard, Goldman Sachs, and Tudor Investment, cutting a combined 68,000 BTC in holdings, according to Galaxy Research's analysis of 13F filings.
- • Spot bitcoin ETF holdings by 13F filers fell about 14 percent to 307,000 BTC at end-June 2026 from 355,000 BTC at end-September 2025, while bitcoin's price fell 49 percent over the same period.
- • Galaxy attributes much of the hedge fund selling to narrowing returns from the "cash-and-carry" basis trade rather than bearishness, with the annualised basis falling from 7.9 percent to 4.8 percent and excess return over cash estimated at about 1.5 percentage points after costs.
- • Sovereign wealth funds Mubadala and the Abu Dhabi Investment Authority, along with Morgan Stanley's wealth management unit, increased holdings during the period.
- • Since June's low, ETF holdings have risen by 87,000 BTC, and Galaxy reads the recent buying as increasingly tied to expectations of price gains rather than arbitrage.
Summary
Institutional selling of spot bitcoin exchange-traded funds during a bitcoin downturn was concentrated among a small group of hedge funds and banks, according to research from Galaxy Research reported by Decrypt on Oct. 28. Galaxy analysed quarterly 13F disclosures filed with the U.S. Securities and Exchange Commission and found that spot bitcoin ETF holdings by 13F filers fell about 14 percent, to 307,000 BTC at end-June 2026 from 355,000 BTC at end-September 2025.
Millennium Management, Brevan Howard, Goldman Sachs, Capula Management, Farallon Capital, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments and Tudor Investment together cut a combined 68,000 BTC, with reductions ranging from 29 percent to 100 percent by institution. That outflow exceeded the net decline of 48,000 BTC across all filers, as other institutions were estimated to have added a combined roughly 20,000 BTC. Morgan Stanley's wealth management unit, Abu Dhabi sovereign wealth fund Mubadala and the Abu Dhabi Investment Authority were among the buyers. Holdings among advisers, family offices and individual investors that do not file 13Fs fell only 6.6 percent over the same period, while bitcoin's price fell 49 percent.
Galaxy analysed much of the hedge fund selling as driven by worsening arbitrage economics rather than bearishness on bitcoin. Many of these firms ran a "cash-and-carry" strategy, buying spot ETFs while selling bitcoin futures on the Chicago Mercantile Exchange. The average annualised basis for front-month futures fell from 7.9 percent in the 30 days before bitcoin's peak to 4.8 percent in the 30-day average through Oct. 21, narrowing the spread over 3-month U.S. Treasury yields from 3.9 percentage points to 0.6 points. Longer-dated November and December contracts offered a basis of 6.3 to 6.5 percent as of Oct. 21, but after ETF fees, roll costs and margin requirements, Galaxy estimated excess returns over cash at about 1.5 percentage points, a level it said makes it difficult to justify taking on extreme volatility risk.
Position reductions also appeared in futures markets. The U.S. Commodity Futures Trading Commission reported that asset managers' net long positions in CME bitcoin futures fell 57 percent to 18,400 BTC from 43,300 BTC in the week bitcoin reached its all-time high. Spot ETF holdings proved more resilient: total bitcoin held across all ETFs fell 11 percent from the October 2025 peak to the July 2026 trough, compared with bitcoin's 53 percent price decline over the same period. Since June, when bitcoin hit its low, ETF holdings have risen by 87,000 BTC and leveraged funds' net short futures positions have declined. Galaxy interprets the recent buying as increasingly weighted toward expectations of price gains rather than arbitrage.
Millennium Management, Brevan Howard, Goldman Sachs, Capula Management, Farallon Capital, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments and Tudor Investment together cut a combined 68,000 BTC, with reductions ranging from 29 percent to 100 percent by institution. That outflow exceeded the net decline of 48,000 BTC across all filers, as other institutions were estimated to have added a combined roughly 20,000 BTC. Morgan Stanley's wealth management unit, Abu Dhabi sovereign wealth fund Mubadala and the Abu Dhabi Investment Authority were among the buyers. Holdings among advisers, family offices and individual investors that do not file 13Fs fell only 6.6 percent over the same period, while bitcoin's price fell 49 percent.
Galaxy analysed much of the hedge fund selling as driven by worsening arbitrage economics rather than bearishness on bitcoin. Many of these firms ran a "cash-and-carry" strategy, buying spot ETFs while selling bitcoin futures on the Chicago Mercantile Exchange. The average annualised basis for front-month futures fell from 7.9 percent in the 30 days before bitcoin's peak to 4.8 percent in the 30-day average through Oct. 21, narrowing the spread over 3-month U.S. Treasury yields from 3.9 percentage points to 0.6 points. Longer-dated November and December contracts offered a basis of 6.3 to 6.5 percent as of Oct. 21, but after ETF fees, roll costs and margin requirements, Galaxy estimated excess returns over cash at about 1.5 percentage points, a level it said makes it difficult to justify taking on extreme volatility risk.
Position reductions also appeared in futures markets. The U.S. Commodity Futures Trading Commission reported that asset managers' net long positions in CME bitcoin futures fell 57 percent to 18,400 BTC from 43,300 BTC in the week bitcoin reached its all-time high. Spot ETF holdings proved more resilient: total bitcoin held across all ETFs fell 11 percent from the October 2025 peak to the July 2026 trough, compared with bitcoin's 53 percent price decline over the same period. Since June, when bitcoin hit its low, ETF holdings have risen by 87,000 BTC and leveraged funds' net short futures positions have declined. Galaxy interprets the recent buying as increasingly weighted toward expectations of price gains rather than arbitrage.
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