Hedge Funds Sell Bitcoin ETFs as Sovereign Funds Buy
Hedge funds sold Bitcoin ETFs, while sovereign funds bought
In this article
Bitcoin ETF sales
According to Decrypt, hedge funds sold about 68,000 Bitcoin worth of ETF shares between late 2025 and mid-2026 1. This sale was largely due to changing relative-value opportunities rather than a fundamental shift in sentiment towards Bitcoin. The sellers exited because the futures basis narrowed to just 0.6 percentage points above short-term U.S. Treasury bills 1. As a result, the trade was no longer profitable for hedge funds.
Hedge funds, including Millennium and Goldman Sachs, reduced their Bitcoin ETF holdings by approximately 68,000 BTC 2. The reductions ranged from 29% to 100% 4. This implies that the remaining filers collectively increased their holdings by about 20,000 bitcoins 4. The buyers included Morgan Stanley’s wealth management division and Mubadala.
The sale of Bitcoin ETFs by hedge funds has significant implications for the market 1. The futures data also shows a similar trend, with the net long positions of asset management firms falling by 57% 4. The net short positions of leveraged funds also decreased by the same magnitude 4. This decline in open interest has affected the overall market sentiment.
Hedge funds sold about 68,000 Bitcoin worth of ETF shares
Sovereign fund purchases
Sovereign wealth funds and wealth managers have increased their allocations to Bitcoin ETFs 2. According to Galaxy Research, the buyers included Morgan Stanley’s wealth management division, Mubadala, and the Abu Dhabi Investment Council 4. These investors are taking a longer-term view of the market, unlike hedge funds that were trading on a short-term basis 1. The purchases by sovereign funds have helped to stabilize the market.
Recently, sovereign funds' purchases are a significant development 2. These investors are increasing their holdings, suggesting they have a positive view of the asset 3. VanEck’s launch of a new ETF with a 2% Bitcoin target is also a positive sign 3. This ETF combines equities, fixed income, gold, and other real assets with Bitcoin exposure.
Meanwhile, sovereign funds and wealth managers have helped offset hedge funds' sales 2. Renewed net outflows occurred in October, alongside a slowdown in corporate Bitcoin purchases 2. The company's wealth managers' actions could bolster demand 2. Third-quarter US regulatory filings, due by 16 November, will shed more light on institutional positioning.
Market implications
Following the sales, hedge funds' actions and sovereign funds' purchases have significant implications 1. Declining open interest has affected overall sentiment 4. They may bolster demand with their buying activity 2. These third-quarter US regulatory filings are eagerly awaited, which are expected to reveal their positions.
Economic conditions affect investors' decisions 3. Traditional portfolios of stocks and bonds are no longer effective 3. Adding real assets, including Bitcoin, can help investors navigate various economic conditions 3. VanEck’s new ETF with a 2% Bitcoin target responds to this changing landscape.
Volatility is anticipated in the coming months 1. The Fed’s decision to hold interest rates has stabilized sentiment 1. Expected tightening has been cut roughly in half, which could benefit risk assets 1. October flows already show a shift, with fast money gone and believers remaining 1.
US regulatory filings
Filings due by 16 November reveal the extent to which sovereign funds and wealth managers have increased their holdings 2. They also show the extent to which hedge funds have reduced theirs 2. These filings are anticipated to better understand overall sentiment. The extent of their holdings will be disclosed in these filings 2.
Policymakers note that the US regulatory filings are an important indicator of market sentiment 2. Even so, the filings will provide insight into the investment strategies of institutional investors 2. Furthermore, the filings will also show the extent to which investors are increasing their allocations to Bitcoin ETFs 2. The market is expected to be volatile in the coming months, and the filings will provide important guidance.
Their actions affect sentiment 1. Hedge funds' sales and sovereign funds' purchases have significant implications 1. Buying activity may bolster demand 2. These US regulatory filings reveal their positioning and sentiment.
Vanek ETF launch
VanEck launched a new ETF with a 2% Bitcoin target, combining equities, fixed income, gold, and other real assets with Bitcoin exposure 3. The ETF is a response to the changing investment landscape 3. The traditional 60/40 portfolio of stocks and bonds is no longer effective, and the addition of real assets, including Bitcoin, could help investors navigate a wider range of economic conditions 3. The ETF carries a management fee of 0.15% and acquired fund fees of 0.18%.
Notably, VanEck’s ETF is a significant development 3. It provides investors with a new way to gain exposure to Bitcoin 3. Generally, the ETF combines Bitcoin with other real assets, providing a diversified portfolio 3. Thus, this ETF is likely to be popular with investors seeking a new way to invest in Bitcoin.
Five months after the launch, VanEck’s ETF launch is a positive sign 3. They now have a new way to gain exposure to Bitcoin 3. Consequently, buying demand may increase 2. However, volatility is anticipated, but the launch of VanEck’s ETF is a positive development.
Frequently asked questions
What happened to hedge funds' Bitcoin ETF holdings?
Hedge funds sold about 68,000 Bitcoin worth of ETF shares between late 2025 and mid-2026 1.
Who bought Bitcoin ETFs?
Sovereign wealth funds and wealth managers, including Morgan Stanley’s wealth management division and Mubadala, bought Bitcoin ETFs 4.
What is the significance of VanEck's new ETF?
VanEck's new ETF combines equities, fixed income, gold, and other real assets with Bitcoin exposure, providing a diversified portfolio 3.
About this article
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- decrypt.co: Morning Minute: Hedge Funds Left the BTC ETF Trade and Sovereign Wealth Stepped In · Oct 29, 2026 ET
- Hedgeweek: Hedge funds reduce Bitcoin ETF exposure as sovereign and wealth investors increase allocations · Oct 29, 2026 ET
- CoinMarketCap: VanEck Launches Wealth Builder ETF With 2% Bitcoin Target · Oct 28, 2026 ET
- KuCoin: Institutional Sell-Off in Bitcoin ETFs as Sovereign Funds Step In · Oct 28, 2026 ET
