What signal? Goldman Sachs and Morgan Stanley both enter the spot Bitcoin ETF market

Well-known Wall Street companies and large institutional investors bought spot Bitcoin ETFs in the second quarter, indicating strong demand for these products in the traditional financial sector.

Documents submitted to regulatory agencies on Wednesday showed that Goldman Sachs and Morgan Stanley collectively purchased over $600 million worth of spot Bitcoin ETFs in the second quarter.

These two banks joined a group of hedge funds and financial advisors entering into such products, which are set to start trading in January 2024.

Goldman Sachs stated in its quarterly disclosure document (Form 13-F) submitted to the U.S. Securities and Exchange Commission that the company holds 7 out of the 11 U.S. spot Bitcoin ETFs and has invested around $418 million in spot Bitcoin ETFs.

Most of Goldman Sachs' positions are concentrated in BlackRock's spot Bitcoin ETF, IBIT, with a holding of nearly 7 million shares, valued at approximately $238 million as of the end of the quarter (June 30). Goldman Sachs also holds significant shares in Fidelity Wise Origin Bitcoin ETF (FBTC) and Invesco Galaxy Bitcoin ETF (BTCO), as well as smaller positions in several other Bitcoin ETFs launched in January.

Morgan Stanley also favors BlackRock's IBIT, disclosing a holding of 5.5 million shares valued at $188 million as of June 30, along with smaller positions in Ark 21Shares Bitcoin ETF (ARKB) and Grayscale Bitcoin ETF (GBTC).

Form 13-F is one of the few ways to understand institutional investors' holdings at the end of each quarter, but these positions may not reflect the current actual holdings.

While the latest filings indicate that the number of institutions investing in Bitcoin ETFs may be increasing, ETF issuers and analysts state that so far, these products have been mainly dominated by individual investors.

Both banks have not commented on whether their positions were acquired for clients or for their own accounts, but it is clear that BlackRock's IBIT is the biggest "winner".

The filings show that some hedge funds that established positions in Bitcoin ETFs earlier this year adjusted their holdings in the second quarter. New York-based Hunting Hill Global Capital reduced its exposure to GBTC and FBTC, but as of June 30, it held $18.32 million in Bitwise Bitcoin ETF (BITB) and increased its holdings in BlackRock's iShares Bitcoin ETF by $25.6 million.

Adam Guren, founder and CEO of Hunting Hill Global Capital, stated that the company is an active trader of Bitcoin products, saying, "Our trading activities may vary at any given time, so our positions may change Millennium Management, headquartered in New York, disclosed that the company reduced its holdings in three out of five Bitcoin ETFs in the first quarter, while maintaining its exposure in the Ark 21Shares ETF and increasing its stake in BITB from approximately 1.2 million shares at the end of the first quarter to nearly 2 million shares.

Overall, as of the end of the second quarter, the hedge fund had invested around $1.15 billion in Bitcoin ETFs, lower than the $2 billion disclosed at the end of the first quarter. The company spokesperson declined to comment