Bitcoin Holdings Boosted by Big Players

The Securities and Exchange Commission (SEC) could finally change its tune regarding spot Bitcoin exchange traded funds. A notable rally in the largest cryptocurrency fueled speculation. And data indicate large institutional players are increasing their Bitcoin holdings.

That could prove impactful for equity-based, crypto-related exchange traded funds, such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO). Actually, it already is as SATO is higher by a staggering 147% on a year-to-date basis.

Bitcoin has been trending higher over the past several weeks as a slew of traditional asset managers, including some of the biggest names in the ETF industry, filed applications for spot biotin ETFs. And that’s a sign credible money managers and fund issuers see long-term viability in it. As such, fund holdings of the digital asset are approaching 696,000 coins.

Why It Matters to SATO

SATO follows the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts, and ETPs Index. And the bulk of its 35 equity holdings engage in crypto mining. This industry correlates to the prices of the assets mined.

So the higher Bitcoin prices go, the more benefits SATO holdings accrue. A clear, efficient avenue for higher Bitcoin prices is for more institutional buyers to enter the market. But not only do they buy in size, they bring credibility to an asset class that’s long faced doubts and concerns regarding volatility and excessive speculation by smaller investors.

“More importantly, though, recent news of new entrants into Bitcoin underscores the staying power of this asset class more broadly. And many investors view this as a once-in-a-generation investment opportunity,” Grayscale CEO Michael Sonnenshein said in an interview with CNBC.

Grayscale is the company behind the Grayscale Bitcoin Trust (GBTC). And that Bitcoin-backed index is SATO’s largest holding at a weight of 15% and is a prime candidate to convert to the ETF wrapper, should the SEC approve spot bitcoin ETFs.

Other data points confirm institutional adoption and retailer investors holding Bitcoin for longer periods, including a declining number of Bitcoin on public exchanges. Both could be pivotal in establishing near-term price support for the cryptocurrency.

As the decline in inflows and supply unfolds, another intriguing trend emerges. Institutional fund accumulation, as observed by CryptoQuant. Institutional investors, including hedge funds, investment firms, and cryptocurrency private funds, are currently actively increasing their holdings of Bitcoin,” reported Newsbtc.

For more news, information, and analysis, visit the Crypto Channel is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for SATO, for which it receives an index licensing fee. However, SATO is/are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SATO.