Key Takeaways
- • Nine firms, led by Millennium Management, Brevan Howard, Goldman Sachs, Capula, Farallon, D.E. Shaw, Schonfeld, Symmetry and Tudor, cut about 68,000 BTC (roughly $5.4 billion) of U.S. spot Bitcoin ETF exposure, according to a Galaxy Research report.
- • Institutional 13F holdings in spot Bitcoin ETFs fell from 355,000 BTC at the end of September 2025 to 307,000 BTC by June 2026, a 14% decline, while Bitcoin fell about 49% to 53% from its peak.
- • Galaxy attributes the selling to the collapse of the cash-and-carry basis trade, which averaged 4.8% annualized in the 30 days to Oct. 21 versus 7.9% before the Bitcoin high, leaving only about 0.6 points over Treasury bills.
- • Morgan Stanley's wealth arm, Mubadala and the Abu Dhabi Investment Council were among buyers, and about 2,200 other 13F filers added roughly 20,000 BTC.
- • CFTC data shows asset managers' net long CME Bitcoin futures fell 57% from the all-time-high week, and open interest is down 28% in Bitcoin terms.
Summary
A Galaxy Research report published Monday found that a small group of hedge funds and banks accounted for nearly all institutional selling of U.S. spot Bitcoin ETFs during the 2026 slump, while wealth platforms and sovereign funds bought. Nine firms, including Millennium Management, Brevan Howard, Goldman Sachs, Capula Management, Farallon Capital, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments and Tudor Investment, reduced their positions by between 29% and 100%, together cutting 68,000 BTC of exposure, roughly $5.4 billion at prevailing prices. The remaining roughly 2,200 13F filers added about 20,000 BTC in aggregate, worth about $1.6 billion. Morgan Stanley's wealth management arm, Abu Dhabi's Mubadala and the Abu Dhabi Investment Council were among the buyers. Advisers, family offices and individuals who do not file 13Fs cut holdings by just 6.6% while the price fell 49%.
Galaxy head of firmwide research Alex Thorn said the sellers were largely running a trade rather than expressing a view on Bitcoin. Many had used a cash-and-carry strategy, buying spot ETF shares while shorting CME Bitcoin futures to capture the basis. That spread has nearly disappeared: the front-month basis averaged 7.9% annualized in the 30 days before the Bitcoin high, 3.9 points above three-month Treasury bills, but averaged 4.8% in the 30 days to Oct. 21, only 0.6 points above bills. After fees, rolling costs and margin, the trade now earns about 1.5 points over cash, according to the report. "That arithmetic, not the price, is why the multi-strategy desks left," Thorn wrote.
CFTC data corroborates the shift. Asset managers' net long CME Bitcoin futures fell from 43,300 BTC to 18,400 BTC, a 57% drop, and leveraged funds' net short, the futures side of the carry trade, shrank proportionally from 71,400 BTC to 30,600 BTC. Open interest fell 28% in Bitcoin terms and 51% in dollar terms. Further-dated November and December contracts priced at 6.3% to 6.5% at the Oct. 21 close, about 2 points over bills before costs, but Thorn argued the edge does not compensate for tail risk, noting the basis inverted to negative 31% annualized in December 2022.
Overall, spot ETF holdings fell only 11% from their October 2025 peak to the July trough while Bitcoin dropped 53%. Since the June low, funds have added 87,000 BTC, which Galaxy characterizes as directional buying rather than carry. Recent flows have been choppy: Decrypt reported that the ETFs shed nearly $1 billion over two weeks earlier in October before posting their best day in nearly a month on Oct. 19, when BlackRock's IBIT drove the buying. A subsequent three-day, $1 billion inflow run was followed by heavy outflows, and BTF flows turned positive this week at roughly $286 million. The 13F data runs only through June and does not capture more recent positioning. Galaxy discloses that it holds Bitcoin.
Galaxy head of firmwide research Alex Thorn said the sellers were largely running a trade rather than expressing a view on Bitcoin. Many had used a cash-and-carry strategy, buying spot ETF shares while shorting CME Bitcoin futures to capture the basis. That spread has nearly disappeared: the front-month basis averaged 7.9% annualized in the 30 days before the Bitcoin high, 3.9 points above three-month Treasury bills, but averaged 4.8% in the 30 days to Oct. 21, only 0.6 points above bills. After fees, rolling costs and margin, the trade now earns about 1.5 points over cash, according to the report. "That arithmetic, not the price, is why the multi-strategy desks left," Thorn wrote.
CFTC data corroborates the shift. Asset managers' net long CME Bitcoin futures fell from 43,300 BTC to 18,400 BTC, a 57% drop, and leveraged funds' net short, the futures side of the carry trade, shrank proportionally from 71,400 BTC to 30,600 BTC. Open interest fell 28% in Bitcoin terms and 51% in dollar terms. Further-dated November and December contracts priced at 6.3% to 6.5% at the Oct. 21 close, about 2 points over bills before costs, but Thorn argued the edge does not compensate for tail risk, noting the basis inverted to negative 31% annualized in December 2022.
Overall, spot ETF holdings fell only 11% from their October 2025 peak to the July trough while Bitcoin dropped 53%. Since the June low, funds have added 87,000 BTC, which Galaxy characterizes as directional buying rather than carry. Recent flows have been choppy: Decrypt reported that the ETFs shed nearly $1 billion over two weeks earlier in October before posting their best day in nearly a month on Oct. 19, when BlackRock's IBIT drove the buying. A subsequent three-day, $1 billion inflow run was followed by heavy outflows, and BTF flows turned positive this week at roughly $286 million. The 13F data runs only through June and does not capture more recent positioning. Galaxy discloses that it holds Bitcoin.
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