Morgan Stanley Discloses $270 Million in US Spot Bitcoin ETFs

Morgan Stanley, a prominent multinational investment bank and financial services company, revealed its U.S. spot Bitcoin exchange-traded fund (ETF) holdings, totaling over $270 million as of March 31, in a quarterly 13F filing with the Securities and Exchange Commission (SEC) on Wednesday. 

Morgan Stanley’s Major Investment in Bitcoin ETFs

The disclosure that was made in a  in a quarterly 13F filing included $269.9 million worth of Grayscale’s converted spot Bitcoin ETF (GBTC), positioning Morgan Stanley as the third-largest holder of GBTC shares, behind Susquehanna, which holds $1.1 billion, and Horizon Kinetics, which holds $946 million, as per Fintel data. Additionally, Morgan Stanley reported a $2.3 million investment in Ark Invest’s spot Bitcoin ETF, placing it among the top 20 holders of ARKB, according to Fintel.

13F filings are mandatory quarterly reports submitted to the SEC by institutional investment managers with at least $100 million in equity assets under management. These filings provide insight into the stock holdings of these managers at the end of each quarter. However, it is important to note that 13F reports only require the disclosure of long positions in U.S. equities and options on equities, not short positions, thereby offering only a partial view of an investment manager’s overall portfolio strategy.

Institutional Ownership of Bitcoin ETFs on the Rise

In a note to investors in January, Morgan Stanley’s Head of Digital Asset Markets, Andrew Peel, described the launch of the U.S. spot Bitcoin ETF as a potential paradigm shift in the global perception and use of digital assets. The following month, a Morgan Stanley fund indicated in an SEC filing that it might gain exposure to spot Bitcoin ETFs. By last month, the firm had reportedly established risk management requirements to potentially allow its 15,000 brokers to recommend these ETFs to clients.

Institutional ownership of spot Bitcoin ETFs has been on the rise, with Morgan Stanley among hundreds of institutional investors declaring their U.S. spot Bitcoin ETF holdings in their first-quarter 13F filings over the past few weeks. Millennium Management recently emerged as the largest known holder in this category, with a combined $1.94 billion in shares across five funds: ARK Invest’s ARKB, Grayscale’s GBTC, and Fidelity’s FBTC.

Despite the substantial holdings, the fair market value of these shares accounted for only 3% of the hedge fund’s $64 billion in assets under management, according to its quarterly 13F filing with the SEC. Bloomberg ETF analyst Eric Balchunas noted that Millennium is the leading holder of Bitcoin ETFs, with about $2 billion across five ETFs. This substantial investment comes from over 500 holders, significantly higher than the average for a new ETF. The majority of these investors are investment advisors (60%), with a notable portion being hedge funds (25%).

Bracebridge Capital’s Significant Bitcoin ETF Holdings

Last week, Bracebridge Capital was identified as a top holder of ARK Invest’s ARKB and BlackRock’s IBIT spot Bitcoin ETFs, alongside a significant allocation of Grayscale’s GBTC. Bracebridge’s combined spot Bitcoin ETF holdings were valued at $434 million as of March 31. The State of Wisconsin Investment Board also disclosed a $163 million stake in BlackRock and Grayscale’s spot Bitcoin ETFs. Earlier this week, Bitwise CIO Matt Hougan commented on the spot Bitcoin ETF allocations revealed in the recent 13F filings, describing them as merely a “down payment.”

Hougan estimated that 563 professional investment firms had reported owning $3.5 billion worth of Bitcoin ETFs as of the previous Thursday. He projected that by the May 15 filing deadline, over 700 professional firms might have invested nearly $5 billion in total assets under management (AUM) in these ETFs. He highlighted that the scale of ownership was unprecedented for new ETFs, comparing it to the launch of gold ETFs in 2004, which was previously considered the most successful ETF launch.

Recent Institutional Investments in Spot Bitcoin ETFs

Several other firms have also disclosed significant investments in spot Bitcoin ETFs. On May 14, New York advisory firm Pine Ridge Advisers announced a $205.8 million investment in spot Bitcoin ETFs, including $83.2 million in BlackRock’s IBIT, $93.4 million in Fidelity’s FBTC, and $29.3 million in Bitwise’s BITB. New York-based hedge fund manager Boothbay Fund Management reported $377 million in exposure to spot Bitcoin ETFs, comprising $149.8 million in IBIT, $105.5 million in FBTC, $69.5 million in GBTC, and $52.3 million in BITB.

Additionally, alternative asset manager Aristeia Capital Llc disclosed $163.4 million in IBIT on May 15. Connecticut-based investment firm Graham Capital Management revealed $98.8 million in IBIT and $3.8 million in FBTC, while hedge fund manager CRCM Lp disclosed $96.6 million in IBIT. New York investment manager Fortress Investment Group LLC reported $53.6 million in IBIT.

These filings mark the end of the first quarter during which investors could purchase most spot Bitcoin ETFs. Despite the influx of institutional investments, Hougan noted that retail investments still constitute the largest portion of the funds invested in spot Bitcoin ETFs, which collectively have around $50 billion in AUM as of press time.