Bank Clients Dipped Their Toes into Bitcoin ETFs, but Q4 Could See a FOMO Spike

Institutional investors, including top-tier banks like Goldman Sachs, Morgan Stanley, and Bank of America, have continued to modestly accumulate bitcoin via exchange-traded funds (ETFs) in the third quarter. However, the recent price action and the election of a crypto-friendly president could spark a fear of missing out (FOMO) in institutional players and their clients.

The 13F filings, a quarterly report that institutional investors with over $100 million in assets under management are required to file to disclose their holdings of certain securities, showed that Goldman Sachs reported holding spot bitcoin ETF shares worth $710 million in the quarter that ended September 30. This is nearly double the $418 million in the previous quarter, with most of the bank’s shares held in BlackRock’s iShares Bitcoin Trust (IBIT).

Other top-tier banks and wealth management operations, including Morgan Stanley, Cantor Fitzgerald, Royal Bank of Canada, Bank of America, UBS, and HSBC, didn’t add to or subtract much from their positions. However, Australian investment bank Macquarie Group, a new entrant, purchased 132,355 shares of IBIT worth $4.8 million.

The three-month period from the start of July to the end of September saw flat to downward price action for bitcoin, ranging from $53,000 to $66,000. This followed the flat to downward price action during much of the second quarter, which may have contributed to the tepid institutional interest.

However, things have changed significantly in the fourth quarter, with bitcoin blasting out of its multi-month range and reaching new highs of $93,400. The recent price action, combined with the hoped-for crypto-friendly policies of the new administration, could inspire a good deal of FOMO in institutional players and their clients.

James Van Straten, senior analyst at CoinDesk, noted that the 13F filings mirror the tepid price action in bitcoin in Q3. He also stated that most institutions are slow to deploy capital and to observe trends, and didn’t take the initiative to front-run a historically bullish Q4. Van Straten expects a lot of scrambling behind the scenes to make sure institutions have at the bare minimum a 1% allocation due to the crypto-friendly president and bitcoin breaking out.

The next batch of 13Fs coming after the start of 2025 could prove far more interesting than this quarter’s, with institutional investors likely to increase their allocations to bitcoin and other cryptocurrencies in response to the changing market dynamics and regulatory environment.

Predictions:

1. Increased institutional investment in bitcoin and other cryptocurrencies in Q4 and beyond.

2. A potential FOMO spike in institutional players and their clients, driven by the recent price action and the election of a crypto-friendly president.

3. Further growth in the adoption of spot bitcoin ETFs and other cryptocurrency investment products among institutional investors.

4. A potential shift in the regulatory environment, with the new administration potentially introducing more crypto-friendly policies and regulations.

Conclusion:

The recent price action and the election of a crypto-friendly president have created a perfect storm for institutional investors to increase their allocations to bitcoin and other cryptocurrencies. With the potential for a FOMO spike and further growth in the adoption of cryptocurrency investment products, the next batch of 13Fs could prove far more interesting than this quarter’s.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top