More than half of the leading American hedge funds have reported investments in newly introduced spot Bitcoin (BTC) exchange-traded funds (ETFs) over the past year, driven by BTC/USD significantly outperforming major stocks and indexes.
According to data from investment firm River, by the end of Q1 2024, 13 out of the top 25 U.S. hedge funds had exposure to Bitcoin ETFs. Millennium Management stands out among them, holding 27,263 BTC valued at $1.69 billion, constituting approximately 2.5% of its total assets under management of $67.7 billion.
Image caption: Bitcoin ETF exposure across top 25 U.S. hedge funds. Source: River
Other notable participants include Schonfeld Strategic Advisors with 6,734 BTC and Point72 Asset Management with 1,089 BTC. However, several prominent hedge funds such as Bridgewater Associates, AQR Capital Management, and Balyasny Asset Management have yet to venture into Bitcoin ETFs.
Interestingly, Bitcoin’s increasing adoption coincides with a surge in cash reserves held by U.S. corporations, which hit a record high of $4.11 trillion in Q1 2024, as per an analysis by treasury advisory firm Carfang Group.
Image caption: Cash holdings by U.S. companies in recent quarters. Source: Bloomberg
Some of these firms, including Reddit, Semler Scientific, JPMorgan, and Wells Fargo, among others, have allocated a portion of their cash reserves to Bitcoin or Bitcoin ETFs. This trend underscores growing confidence among U.S. entities, from hedge funds to corporations, in Bitcoin as a viable asset for diversification and hedging against traditional market risks.
Bitcoin’s performance has notably surpassed that of top stocks like Apple and Tesla in 2024, further fueling Wall Street’s interest. BTC saw returns of approximately 94% in the first half of the year, compared to a 23% increase in the S&P 500 and a 14% rise in the Dow Jones Industrial Average during the same period.
Image caption: Bitcoin relative growth. Source: LookIntoBitcoin
While Apple and Tesla stocks yielded 10% and -29% respectively year-to-date, Nvidia emerged as a standout performer with over 150% growth in the first six months of 2024, driven by the ongoing artificial intelligence boom.
In related insights, veteran trader Peter Brandt predicts Bitcoin’s significance as a hedge asset will grow, particularly against traditional safe-havens like gold, with BTC’s market capitalization potentially surging 230% relative to gold post-2025.
Earlier this year, ARK Invest’s annual research report suggested that institutional portfolios aiming for optimized risk-adjusted returns should have allocated 19.4% to Bitcoin in 2023.
It’s important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.