More than half of the leading American hedge funds have reported investments in newly introduced spot Bitcoin (BTC) exchange-traded funds (ETFs) over the past year, as BTC/USD has significantly outpaced major stocks and indexes.
One notable hedge fund has allocated 2.5% of its total portfolio to Bitcoin. Data compiled by investment firm River indicates that by the end of Q1 2024, 13 out of the top 25 U.S. hedge funds had holdings in Bitcoin ETFs. Among these, Millennium Management stands out with 27,263 BTC valued at $1.69 billion, comprising approximately 2.5% of its $67.7 billion in assets under management.
Chart depicting Bitcoin ETF exposure among top 25 U.S. hedge funds. Source: River
Other significant players include Schonfeld Strategic Advisors, holding 6,734 BTC, and Point72 Asset Management, holding 1,089 BTC. In contrast, some prominent hedge funds such as Bridgewater Associates, AQR Capital Management, and Balyasny Asset Management have not yet ventured into Bitcoin ETFs.
Interestingly, Bitcoin’s increasing adoption coincides with a surge in cash reserves held by U.S. corporations. Notably, cash or cash equivalents among corporations reached a record high of $4.11 trillion in Q1 2024, according to an analysis by treasury advisory firm Carfang Group.
Graph illustrating cash holdings by U.S. companies in recent quarters. Source: Bloomberg
Several of these corporations, including Reddit, Semler Scientific, JPMorgan, and Wells Fargo, have diversified a portion of their cash reserves into Bitcoin or Bitcoin ETFs. This trend underscores the growing confidence among U.S. firms, including hedge funds and corporations, in Bitcoin as a viable asset for diversification and hedging against traditional market risks.
Bitcoin’s performance in 2024 has surpassed that of leading stocks such as Apple and Tesla. Wall Street’s interest in Bitcoin continues to grow as the cryptocurrency outperforms major stocks and stock indexes. BTC delivered returns of approximately 94% in the first half of 2024, while the U.S. benchmark S&P 500 rose 23% and the Dow Jones Industrial Average gained 14% during the same period.
Comparison chart showing Bitcoin’s relative growth. Source: LookIntoBitcoin
Despite its impressive performance, Apple and Tesla stocks saw returns of 10% and -29% respectively year-to-date. In contrast, Nvidia, now the world’s most valuable publicly traded company, recorded over 150% growth in the first six months of 2024 driven by the artificial intelligence sector boom.
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Veteran trader Peter Brandt anticipates Bitcoin gaining importance as a hedge asset, particularly against traditional safe-havens like gold. He predicts BTC’s market capitalization could increase by 230% compared to gold after 2025.
Earlier this year, ARK Invest’s annual research report concluded that institutional portfolios aiming for maximized risk-adjusted returns should have allocated 19.4% to Bitcoin in 2023.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers are encouraged to conduct their own research before making any decisions.