Hedge funds have sold 68,000 BTC in Bitcoin ETFs, while sovereign funds like Abu Dhabi's Mubadala have increased their holdings, reflecting a shift in institutional investment dynamics.
Institutional Moves in Bitcoin ETFs
Recent data reveals a significant shift in Bitcoin ETF holdings among institutional investors, with major hedge funds offloading substantial amounts while sovereign wealth funds have stepped in to acquire these assets. According to a report by Galaxy Research, prominent firms including Millennium Management, Goldman Sachs, and Tudor Investment collectively sold 68,000 BTC, representing a notable portion of the overall decline in Bitcoin ETF holdings.
As of the end of September 2025, institutions reporting to the SEC held 355,000 BTC in spot ETF shares. By June 2026, this figure had dropped to 307,000 BTC, marking a 14% decrease. The selling was primarily driven by nine major firms, which accounted for the entirety of the decline. In contrast, other institutional filers collectively increased their holdings by approximately 20,000 BTC during the same period.
Among the buyers were Morgan Stanley’s wealth management division, Abu Dhabi’s Mubadala, and the Abu Dhabi Investment Council. Notably, while wealth platforms increased their positions, individual investors and family offices reduced their holdings by merely 6.6% despite a 49% drop in Bitcoin’s price.
Reasons Behind the Selling
According to Galaxy’s head of research, Alex Thorn, the selling activity was not necessarily a rejection of Bitcoin itself. Many of the sellers were engaged in a cash-and-carry strategy, which involved buying spot ETF shares while simultaneously shorting CME Bitcoin futures. This strategy became less attractive as the futures basis shrank to just 0.6 points above Treasury bills, down from an average of 7.9% annualized before Bitcoin’s price peak.
Thorn noted that the reduced profitability of this strategy contributed to the decision by multi-strategy desks to exit their positions. The data from the Commodity Futures Trading Commission (CFTC) also indicated a decrease in asset managers’ net long positions in Bitcoin futures, dropping from 43,300 BTC at Bitcoin’s peak to 18,400 BTC, a 57% reduction. Leveraged funds mirrored this trend with a significant decrease in their net short positions as well.
Recent Trends in ETF Flows
Since the June lows, Bitcoin ETFs have seen a resurgence, adding 87,000 BTC, which Galaxy identifies as directional buying rather than carry trades. However, the flows have been volatile; earlier this month, ETFs experienced nearly $1 billion in outflows before rebounding with significant inflows. The latest reports indicate that Bitcoin ETF flows have turned positive again, albeit in smaller amounts, with around $286 million in inflows recently.
The data reflects trends up to June, suggesting that more recent activity may not be fully captured. Galaxy has disclosed its own Bitcoin holdings, highlighting its engagement in the market amidst these shifts.
