During the Bitcoin correction in the first quarter, the portfolio structures of professional institutions diverged. Data shows that the reduction in holdings mainly came from funds with a stronger trading orientation, while long-term investors such as banks, government agencies, and private equity firms did not withdraw in tandem, and some even continued to increase their holdings.
Hedge funds and securities firms led the reduction in holdings.
The report shows that hedge funds reduced their holdings by approximately 31,400 BTC and brokerages reduced their holdings by approximately 18,800 BTC in the first quarter, making them the main sources of selling by professional institutions.
Morgan Stanley exited its holdings of approximately 8,300 BTC. Reports suggest this may be related to the launch of its own Bitcoin ETF. Jane Street also reduced its holdings by approximately 10,800 BTC, amid weakening ETF inflows in the first quarter.
This round of position reduction roughly coincided with Bitcoin's approximately 22% decline in the quarter, reflecting that trading-oriented funds are reducing their risk exposure more quickly when the market weakens.
Bank and government funds are still increasing their holdings.
Unlike the aforementioned sell-offs, advisory firms generally maintained their existing positions throughout the first quarter. Banks, on the other hand, continued to increase their Bitcoin exposure, adding a total of approximately 7,800 BTC during the quarter.
The report noted that traditional financial institutions such as JPMorgan Chase and Citigroup have expanded or established new Bitcoin holdings, indicating that traditional financial participation is still on the rise.
Government and private equity funds are also increasing their allocations. Government holdings increased by approximately 1,100 BTC, primarily driven by the Mubadala Fund in Abu Dhabi. Private equity firms' Bitcoin exposure increased by 24% quarter-over-quarter and 124% year-over-year.
Shift in holdings from short-term funds to long-term allocators
Structurally, this round of changes resembles a rotation of holdings rather than a complete withdrawal of institutional investors. The selling pressure mainly came from tactical funds such as hedge funds and securities firms, while long-term investors absorbed some of the supply during the pullback.
The report suggests that this shift is similar to previous Bitcoin declines: short-term and ETF-related funds first reduce risk, while long-term holders such as banks and sovereign wealth funds gradually accumulate shares.
Therefore, although the overall holdings of professional institutions declined in the first quarter, the data is closer to "change of holders" rather than a complete exit of institutional funds from the Bitcoin market.
