Bitcoin ETF Ownership Shifts as Hedge Funds Sell and Banks Buy: CoinShares

Professional ownership of US spot Bitcoin exchange-traded funds (ETFs) declined sharply in the first quarter as Bitcoin’s bear market deepened, suggesting that trading-oriented institutions were a significant source of selling pressure during the downturn.

A new report by CoinShares analyzing quarterly 13F filings — regulatory disclosures that reveal the equity holdings of investment managers with at least $100 million in assets — found that professional investors reduced their Bitcoin ETF exposure to 261,000 BTC from 313,000 BTC in the first quarter, a 17% decline.

The combined value of those holdings fell 35% to $17.8 billion, while the share of total US Bitcoin ETF assets held by 13F filers declined to 20.8% from 24.7%.

“This dataset is consistent with what bitcoin markets have historically looked like in drawdowns,” CoinShares digital asset analyst Matt Kimmell wrote in the report. “Leveraged and tactical strategies unwind.”

The selling was heavily concentrated among hedge funds and brokerages, which accounted for roughly 96% of the reduction in exposure. Hedge funds cut their holdings by 31,400 BTC, or 39%, while brokerages reduced exposure by 18,800 BTC, a 53% decline.

In contrast, investment advisors — the largest professional cohort with 150,300 BTC in holdings — reduced exposure by just 5.9%. Banks more than doubled their Bitcoin ETF holdings, adding 7,800 BTC during the quarter.

The decline in professional ownership coincided with a sharp correction in Bitcoin’s price. The asset’s value fell 22% during Q1, extending declines from late 2025 and briefly dropping below $60,000. At its lowest point, Bitcoin was down roughly 50% from its October 2025 all-time high above $126,000.

The share of Bitcoin ETF holdings by professional managers declined in the first quarter. Source: CoinShares

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Despite BTC market volatility, regulatory backdrop improves

Despite the market volatility, CoinShares said the first quarter delivered several regulatory developments that could support the digital asset industry’s long-term growth.

Among them were efforts by US regulators to provide greater clarity around the division of oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), as well as proposals affecting how digital assets may be treated in retirement accounts.

Regulatory progress has continued beyond Q1, with the SEC recently making digital assets a strategic priority through 2030. In a draft document released this week, the agency vowed to “provide a firm regulatory foundation for digital assets and distributed ledger technologies through a rational, coherent, and principled approach.”

SEC Chair Paul Atkins’ message in the agency’s draft Strategic Plan through 2030. Source: SEC

CoinShares also highlighted the growing acceptance of Bitcoin among traditional financial institutions. Earlier this year, BlackRock acknowledged Bitcoin’s potential role in modern portfolios, arguing that the traditional stock-and-bond diversification model has become less reliable in the post-2020 investment environment.

Nevertheless, market participants remain focused on the fate of the CLARITY Act, a proposed market structure bill that would establish a more comprehensive regulatory framework for digital assets and further define the roles of the SEC and CFTC. 

The current version of the bill has drawn scrutiny from the banking industry, though some lawmakers expect it could reach the Senate floor for a vote as early as August.

Related: Crypto Biz: Crypto infrastructure spending rises as ETF appetite cools