Institutional Investors Show Divergent Activity in Bitcoin ETFs Amid Strategy Shifts

Institutional investors have displayed a split in their engagement with U.S. spot Bitcoin ETFs between September 2025 and June 2026, with some significantly reducing their holdings while others increased theirs. This trend, detailed in a report by Galaxy Research, is largely attributed to the diminishing profitability of the cash-and-carry trading strategy.

According to the Galaxy Research report, institutions filing 13F reports held approximately 355,000 BTC worth of spot Bitcoin ETF shares at the end of September 2025. By June 2026, this figure had decreased to 307,000 BTC, marking a 14% reduction. A concentrated group of nine firms, including hedge funds and banks such as Millennium Management, Brevan Howard, Goldman Sachs, Capula Management, Farallon Capital, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments, and Tudor Investment, were responsible for the majority of this decline. Together, these nine firms cut their exposure by 68,000 BTC, valued at roughly $5.4 billion at current prices.

Conversely, other institutional investors, including wealth management platforms and sovereign funds like Morgan Stanley’s wealth management arm, Mubadala, and the Abu Dhabi Investment Council, increased their positions in spot Bitcoin ETFs during the same period. Advisers, family offices, and individuals who do not file 13F reports also saw a smaller reduction in their holdings, cutting back by 6.6% while Bitcoin’s price experienced a 49% fall.

Strategy Shift Drives Selling

Galaxy head of firmwide research Alex Thorn suggests that the selling activity was primarily motivated by trading strategy adjustments rather than a bearish outlook on Bitcoin itself. Many of these institutions had employed the cash-and-carry strategy, which involves buying spot ETF shares while simultaneously shorting CME Bitcoin futures to capture the difference, known as the basis. This strategy’s profitability has recently declined.

Data indicates that the annualized basis for the cash-and-carry strategy averaged 7.9% in the 30 days preceding Bitcoin’s all-time high. However, in the 30 days leading up to October 21, this average basis had fallen to 4.8%. After accounting for fees, rolling costs, and margin, the report estimates that the trade now yields approximately 1.5 percentage points over cash, a significantly reduced return.

“That arithmetic, not the price, is why the multi-strategy desks left,” Thorn wrote. This shift away from the cash-and-carry trade is further reflected in the futures market. CFTC data on CME Bitcoin futures shows a substantial decrease in institutional activity. Asset managers’ net long position fell by 57%, from 43,300 BTC during the week of Bitcoin’s all-time high to 18,400 BTC in a later period. Similarly, leveraged funds’ net short position, a key component of the carry trade, shrank from 71,400 BTC to 30,600 BTC. Open interest in Bitcoin futures has also declined, down 28% in Bitcoin terms and 51% in dollar terms.

Limited Upside and Tail Risk

While the cash-and-carry trade’s profitability has waned, longer-dated futures contracts still offer some premium. November and December futures priced in a basis of 6.3% to 6.5% at the October 21 close, approximately 2 points over Treasury bills before costs. However, Thorn noted that this slim edge may not adequately compensate for the potential tail risk, referencing a basis inversion to negative 31% annualized in December 2022.

Overall, spot ETF holdings experienced an 11% decline from their October 2025 peak to their July trough, coinciding with a 53% fall in Bitcoin’s price during the same period. Since the June low, however, spot ETFs have seen inflows totaling 87,000 BTC. Galaxy characterizes these inflows as potentially directional buying rather than carry-related activity, noting that the 13F data, which runs through June, does not capture these more recent shifts.

Recent ETF flows have been dynamic. Decrypt reported that ETFs shed nearly $1 billion in the two weeks prior to mid-October, followed by a three-day inflow run of $1 billion. More recently, inflows have been smaller, with approximately $286 million recorded so far in the week of October 21.

Why This Matters

The materials describe a narrow update: A report by Galaxy Research indicates that a concentrated group of nine institutional investors, including hedge funds and banks, significantly reduced their holdings in U. The exact total value of Bitcoin held by all entities, not just 13F filers.

Broader Context

Source materials place the factual news in this context: Institutions that file quarterly 13F reports with the SEC held 355,000 BTC worth of spot ETF shares at the end of September 2025, just before Bitcoin’s all-time high. By June 2026, that had fallen to 307,000 BTC, a 14% drop, the report found.