Barclays, Citigroup Expand Spot Bitcoin ETF Holdings in Q3 2023

Barclays and Citigroup significantly increased their stakes in spot Bitcoin exchange-traded funds (ETFs) during the third quarter of 2023, according to recent filings. Barclays reported a 48% rise in its holdings of BlackRock’s iShares Bitcoin Trust ETF (IBIT), bringing its stake to $187 million as of September 30, 2023. Citigroup disclosed a new $119 million position in Fidelity’s Wise Origin Bitcoin Fund (FBTC) and a 50% increase in its IBIT holdings.

Barclays’ filings show it held 3.94 million shares of IBIT valued at approximately $187 million by the end of the third quarter. This represents a substantial increase from its second-quarter holdings, which amounted to 2.66 million shares worth $88.5 million. Citigroup’s filings revealed a new investment of $119 million in the Fidelity Wise Origin Bitcoin Fund (FBTC). Additionally, Citigroup’s holdings in IBIT grew by 50%, reaching about 521,000 shares from 347,000 shares at the close of the second quarter.

These disclosures offer an early glimpse into the evolving landscape of institutional investment in Bitcoin ETFs. However, the full extent of institutional ownership remains unclear, as many other major financial institutions and hedge funds, including JPMorgan, Wells Fargo, Millennium, and Schonfeld, have yet to report their third-quarter positions, which were due by Monday.

Among early filers, banks accounted for $258 million, or 4.9%, of reported spot Bitcoin ETF holdings in the third quarter, an increase from $107 million, or 3.2%, in the second quarter, according to data from Bitwise. Investment advisers remained the largest holders, with reported positions totaling $3.5 billion, or 66.6%, of the total, up from $2.2 billion in the prior quarter. For the 1,389 institutions that had filed their third-quarter reports by Friday, the combined value of their spot Bitcoin ETF holdings rose to $5.25 billion from $3.35 billion in the second quarter.

It is important to note that the increase in the dollar value of these holdings may not solely reflect new capital inflows. According to Jonatan Randin, senior market analyst at PrimeXBT, the rise in IBIT’s share price by approximately 41% during the third quarter suggests that market gains contributed to the reported increase in value, rather than exclusively new institutional buying.

Recent market dynamics show a potential shift. US spot Bitcoin ETFs recorded approximately $6.34 billion in net inflows during the third quarter. However, in the fourth quarter, through Tuesday, these same ETFs saw roughly $2.1 billion in net outflows, according to SoSoValue data. This suggests a potential cooling of institutional interest following the third quarter’s activity.

An October survey by CoinShares highlighted that diversification was cited as a primary reason for holding digital assets by 40% of respondents, significantly outweighing speculation, which accounted for less than 9%. This finding may offer context for the increasing interest from financial institutions in Bitcoin ETFs, as financial advisers at major banks and wealth platforms can now recommend them to clients. This trend is expected to become more evident in future institutional filings.

Why This Matters

The materials describe a narrow update: Barclays reported a 48% increase in its stake in BlackRock’s spot Bitcoin ETF (IBIT) to $187 million as of September 30, 2023. The full extent of institutional Bitcoin ETF ownership is not yet known, as major holders like JPMorgan, Wells Fargo, Millennium, and Schonfeld have yet to report their third-quarter positions.

Broader Context

Source materials place the factual news in this context: Barclays reported a $187 million stake as of Sept. 30, while Citigroup disclosed a new $119 million position in Fidelity’s Bitcoin ETF.