Galaxy Research finds nine firms cut 68,000 BTC ETF exposure, sovereign funds added

This reduction occurred as the cash-and-carry trading mechanism diminished, while concurrently, sovereign funds and wealth platforms increased their purchases.

Firms such as Millennium Management, Goldman Sachs, Tudor Investment, and others collectively shed 68,000 BTC, equating to about $5.4 billion at current market valuations. These entities trimmed their positions by percentages ranging from 29% to 100%.

Conversely, approximately 20,000 BTC, valued at roughly $1.6 billion, was added by the remaining roughly 2,200 filers. Buyers included the wealth management division of Morgan Stanley, alongside Mubadala and the Abu Dhabi Investment Council.

Galaxy Research contends that the divestment by these institutional participants stemmed from a shrinking futures basis, which settled at only 0.6 points above Treasury bills, rather than any negative sentiment regarding Bitcoin itself.

Alex Thorn, head of firmwide research at Galaxy, stated that the sellers were primarily executing a trade, not making a conviction bet on Bitcoin. Many were utilizing the cash-and-carry approach, which involves buying spot ETF shares while simultaneously shorting CME Bitcoin futures to capture the difference, or basis.

This basis gap has nearly disappeared. In the thirty days preceding Bitcoin's peak, the front-month basis averaged 7.9% annualized, which was 3.9 percentage points higher than three-month Treasury bills. More recently, in the thirty days leading up to October 21, it averaged 4.8%, just 0.6 points above bills.

Thorn noted that after accounting for margin, fees, and rolling expenses, the trade now yields approximately 1.5 points over cash. He asserted, “That arithmetic, not the price, is why the multi-strategy desks left.”

This shift aligns with data from the CFTC on CME Bitcoin futures, showing that asset managers’ net long position declined by 57%, moving from 43,300 BTC during the all-time high week to 18,400 BTC.

The movement of institutional holdings reflects a broader trend where the mechanics of derivatives trading are influencing capital flows into the spot ETF market.

Why it matters

This data suggests a shift in institutional sentiment, with traditional financial players exiting a specific trading strategy while sovereign wealth and wealth platforms increase their holdings. Regulators and exchanges are watching these flows closely as they indicate where significant capital is moving within the crypto market structure.