HomeCrypto News3 signs that bitcoin is legitimizing traditional finance

3 signs that bitcoin is legitimizing traditional finance


Bitcoin (BTC), the most important digital asset on the market, is gaining more and more ground in traditional finance, which began to move closer to this decentralized currency since the approval of BTC price exchange-traded funds (ETFs). cash.

This has been demonstrated through direct investment in spot bitcoin ETFs, which are currently trading on the New York Stock Exchange. The interesting thing is that behind these investments, there are giants of the traditional financial system that, taking advantage of the opportunity and acting as market makers, They rushed to invest in bitcoin through ETFs to also take advantage of the bitcoin boom.

Although it is up to that point and no more. These companies have not yet decided to add BTC to their balance sheets. They have only limited themselves to exposure to bitcoin ETFs which, although they are more direct in terms of exposure to the asset, in reality imply the need for an intermediary. It means that investors buy shares of an investment fund that is backed by BTC and therefore do not own the currency directly.

In any case, it is a fact that Traditional finance is beginning to legitimize bitcoin. There are crystal clear signs that BTC is reaching the realm of mainstream global economic, and without much desire to leave. Let’s see them:

  • Nearly 600 companies have invested in bitcoin ETFs since their launch

The first sign that traditional finance legitimizes bitcoin is the number of financial companies that have invested in the digital asset’s ETFs since they were launched 5 months ago.

As of last week, 563 professional investment firms, such as hedge funds and asset management firms, reported their BTC ETF holdings. The total investment was USD 3.5 billion up to that point, according to calculations from Bitwise Chief Investment Officer Matt Hougan.

Hougan estimated that more than 700 professional investment firms would announce their movements with spot bitcoin ETFs but on May 15, when the 13F filing period ended, was revealed that in reality more than 930 professional companies had invested in bitcoin through exchange-traded funds.

Professional investors alone held exposure of $11.06 billion at the end of the first quarter, exceeding Hougan’s projections.

“This is absolutely massive. For any financial advisor wondering if he is the only one considering exposure to bitcoin, the answer is clear: he is not alone,” noted the specialist.

The ETF investor population is varied. Bloomberg agency analyst Eric Balchunas identified that most of these They are investment advisors (60%). He also sees a large share of hedge funds, at 15%.

Among the largest ETF investors stand out the firm Millenium Management, which is currently the company that the most you have paid money for these investment products. He is estimated to have invested around $2 billion in 4 bitcoin ETFs, according to Balchunas.

Matt Hougan too identified to other large BTC ETF investors, such as asset management firms. He pointed out, for example, Cambridge Investment Research, with more than 40 years of activity, who invested USD 40 million in the ETFs.

Another firm highlighted by Hougan is Bracebridge Capital, a hedge fund that invested $434 million in BTC ETFs. He also identified Hightower Advisors, which shelled out $68 million, and Integrated Advisors, which has $11 million in bitcoin ETFs.

An entity that invested USD 100 million in the BlackRock firm’s bitcoin ETF draws attention to the fact that It is annexed to the government of the state of Wisconsin, in United States. This is the local Investment Board (SWIB).

According to Bloomberg’s Balchunas, treats of a “good sign” that SWIB has invested in BTC ETFs. “Let’s wait longer, since institutions tend to move in herds,” he said.

This is how investments in bitcoin ETFs were going until May 15, 2024. Source: Eric Balchunas.
  • A lot of money continues to pour into bitcoin ETFs

In addition to the hundreds of companies that invested in BTC ETFs, another sign that shows the legitimization of this asset in traditional finance, are the important inflows of money in favor of these investment products.

According to data from the SosoValue monitor, on May 15, bitcoin ETFs registered a Total daily net income greater than USD 300 million. The highest number of admissions recorded since last May 3.

The Fidelity ETF (FBTC) was the one that obtained the most inflows, with USD 131 million yesterday alone. It was followed by the Bitwise ETF ($86 million) and those by Ark Invest and 21Shares ($39 million).

The GBTC bitcoin ETF, issued by Grayscale, meanwhile recorded its third largest inflow of money in history. In total, USD 27 million came in.

The other ETFs issued by Valkyrie, VanEck, Franklin Templeton, WisdomTree, Invesco and Galaxy Digital; They had single-digit net inflows. The BlackRock ETF, for its part, recorded no flows.

Since bitcoin ETFs were approved in the United States and began trading on that country’s stock market, the total investment has exceeded USD 12,000 million. A sum that denotes institutional interest in the most important digital asset in the world.

More than $300 million entered the bitcoin ETF market yesterday. Source: SosoValue.
  • Big banks invest in bitcoin ETFs

The third sign that bitcoin is being legitimized in traditional finance is that large, globally recognized banking institutions, revealed having exposure to BTC ETFslikewise, in its 13F filings.

Until now it is known that 6 banking giants in the United States and the world They invested in BTC exchange-traded funds. This, increasing its exposure to the market’s pioneering digital asset.

As we have reported in CriptoNoticias, the US banks JP Morgan Chase, Wells Fargo, PNC Bank, Morgan Stanley, revealed their holdings of spot bitcoin ETFs before the SEC.

In Europe, BNP Paribas, which is the second largest banking institution in that region, reported its investment of thousands of dollars in BTC ETFs. A pattern that was also followed by the Edmond de Rothschild bank, belonging to the Rothschild banking dynasty. That entity invested USD 4.3 million in bitcoin ETFs, as reported by CriptoNoticias.

Morgan Stanley is one of the large financial institutions that invested in bitcoin ETFs. Source: Archive.

Everything indicates that institutional interest in bitcoin will continue to grow

Based on the previous signals, it is evident that BTC is gaining a clear space in traditional finance. Also that It is foreseeable that more financial companies will invest in ETFswhich already seem to have become the most direct (and comfortable) way for the traditional sector to get exposed to BTC.

However, to do this we will first have to overcome the retail interest that currently exists in ETFs. This, because this sector owns the majority of the BTC ETFs, according to the estimates from Bitwise Chief Investment Officer Matt Hougan.

Hougan argues that bitcoin ETFs They have USD 50 billion in assets under management. Therefore, as a percentage of total investment, professional investors own only 7 or 10% of all assets.

This indicates that, in general, ETFs are driven by retail investorssince they have “a lot of money invested in bitcoin ETFs,” Hougan recalls.

“And it is a wonderful thing. It means they can access these investments on the same conditions as the largest institutions in the world,” he said.

However, he notes that this narrative “overlooks” a key pattern already evident in bitcoin ETF purchases and cryptocurrency allocations. This is the first movements of traditional financial companies in favor of bitcoin ETFs “They are just a down payment.”

According to Hougan’s analysis, if a current pattern of purchasing and allocation is followed among corporations, there will be accumulation over time. And this could make “a 1% allocation in an institutional bitcoin portfolio reach a value equivalent to USD 1.2 billion.”


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