BTC falls 14%, institutions bucked the trend and increased their positions: the growth rate of ETH exposure crushes BTC

According to WooFunai, the US Securities and Exchange Commission (SEC) deadline for institutional investors to submit the 13F form for the second quarter has passed, and the real underwriting of Wall Street giants in the crypto asset sector has come to light.

Although the price of Bitcoin experienced a drop of about 14.2% during the same period, the total amount of crypto holdings declared by institutions did not fall but increased, showing reverse allocation characteristics contrary to the market price trend. This divergence is not an accident; it is a concentrated expression of institutions recalibrating risk exposures and adjusting asset allocation structures amid fluctuations, indicating that the penetration logic of crypto assets into the mainstream financial system is undergoing profound changes.

Judging from macro holdings data, institutional holdings in Bitcoin have increased significantly. According to estimated data, the number of bitcoins held by institutions increased from about 498,000 to about 536,000, an increase of 7.5% over the previous month. This increase occurred against the backdrop of spot Bitcoin ETFs continuing to face net redemptions. Total ETF holdings fell from about 1.297,000 to about 1,211,000 in the second quarter. Specifically, there were net monthly outflows of about 2.4 billion US dollars and 4.5 billion US dollars in May and June, respectively. Of these, the scale of outflows in June set the worst record in a single month since listing.

At the same time, the Ethereum ETF also accumulated a net outflow of about 700 million US dollars during the same period. However, the concentration of chips is increasing, and the number of institutions declaring Bitcoin positions has been reduced from about 2,000 to about 1,900, and the leading effect is becoming more obvious. As of August 13, the IBIT single product owned by BlackRock (BLK.US) has attracted the holdings of about 1,500 institutions, and the net assets have reached about US$47.35 billion, showing a trend of concentrating capital on leading products.

On the banking side, enthusiasm for the allocation of Ethereum completely surpassed Bitcoin, and this trend was further confirmed in the second quarter. Previously, the market had observed signs that JaneStreet, Wells Fargo (WFC.US), and JPMorgan Chase (JPM.US) were increasing their Ethereum ETF holdings during the outflow phase, and this quarter's data confirmed this preference.

According to data compiled by WooFunai, based on the number of corresponding crypto assets, Morgan Stanley (MS.US) BTC exposure increased 3.7% month-on-month in the second quarter, while ETH exposure increased sharply by 18.6%; J.P. Morgan's performance was more aggressive. Its BTC exposure increased by 12.2%, while ETH exposure soared 67.3%. Both banks' ETH growth rate was significantly higher than BTC, reflecting a reassessment of the potential value of Ethereum by traditional financial institutions. Looking at the details of individual stock holdings, the ETHA (Ethereum ETF) held by Morgan Stanley increased by about 202% to 4.6 million shares, and the ETHA held by J.P. Morgan Chase increased its ETHA holdings by about 338% to nearly 1.17 million shares. Bank of America (BAC.US) also increased its ETHA holdings from about 67,500 shares to about 1.98 million shares, an increase of about 29 times that of the previous one.

It is worth noting that despite significant increases in banks' positions, the overall net outflow of Ethereum spot ETFs in the second quarter was still showing a net outflow of about US$356 million in April, and net outflows of US$541 million and US$529 million in May and June, respectively. The total net outflow for the second quarter was approximately US$714 million.

This divergence between direct institutional holdings and ETF capital flows suggests that institutions may allocate through more direct channels or derivatives.

In the hedge fund sector, JaneStreet's operation attracted widespread attention in the market. Last quarter, JaneStreet cut its IBIT holdings by about 71%, and the market had speculated that it was bearish on Bitcoin.

However, this quarter, it backhanded and increased IBIT's position of about 24.9 million shares, a significant increase of about 324% over the previous quarter, making it one of the biggest buyers of the quarter. Currently, its spot Bitcoin ETF exposure is approximately US$990 million, of which approximately US$828 million is allocated to IBIT. As an authorized participant and market maker, JaneStreet's year-end inventory changes may be related to redemption and hedging demand, and a sharp increase in spot positions does not necessarily represent a directional bet. A more complicated picture appears in the options market. Form 13F only reveals spot longs at the end of the quarter. If combined with options positions, the real risk exposure of many institutions will be reversed.

Global macro hedge fund BrevanHoward reduced its spot IBIT holdings from 24.3 million shares to 7.21 million shares in the second quarter, a decrease of about 70.4%, but it also held bullish options corresponding to about 7.23 million IBIT shares and 5.27 million put options, creating a complex hedging structure. Graham Capital reduced its spot IBIT from about 926,000 shares to 259,000 shares, reducing its holdings by about 72% during the same period, but it has put options corresponding to about 1.74 million IBIT shares, with a declared value of about $57.94 million, showing a clear intention to protect against the downside.

Multi-strategy giant Millennium reduced spot IBIT from about 19.29 million shares to 9.69 million shares, reducing its holdings by about 49.8%. UBS (UBS.US)'s direct IBIT holdings only increased by about 12% to 407,890 shares, but its call option counterpart holdings soared from 80,000 shares to about 1.95 million shares, a quarterly increase of more than 24 times. During the same period, put options decreased by about 53%, showing strong bullish expectations. In contrast, the operation of Tudor, a fund owned by PauludorJones, appears to be contradictory. While increasing spot IBIT by nearly 20% to 688,500 shares, ending a year of holdings reduction, the bullish options linked to IBIT were cut by about 85%, from 998,000 shares to about 148,000 shares, reflecting its risk rebalancing among different instruments.

When it comes to crypto-related stocks, differences between institutions are getting worse, especially after Strategy (formerly MicroStrategy) broke the myth of “never sell coins.” In the second quarter, Strategy (MSTR.US) sold 32 bitcoins for the first time at the end of May to pay dividends on preferred shares, and on June 29, the board of directors authorized a Bitcoin monetization framework of up to 1.25 billion US dollars. Although the 13F form deadline is June 30, and the actual larger sell-off occurred after the quarter, this move has changed the narrative logic of the BTC proxy target.

According to documents, Bank of America drastically reduced Strategy holdings from about 3.97 million shares to about 1.18 million shares, a decrease of about 70%. In contrast, Renaissance Technologies (Renaissance Technologies) bought 422,881 new shares and increased its total holdings to 2.55 million shares, worth about US$242 million, increasing its holdings by 20%. BlackRock also increased Strategy holdings to about 19.39 million shares, worth about 1.69 billion US dollars, but considering BlackRock's role as the largest index issuer in the entire market, this increase may be due more to passive allocation of indices.

The Royal Bank of Canada (RY.US) increased its holdings of Strategy by 46,000 shares. Currently, it holds about 385,000 shares in total, with a total value of about US$37.2 million, and the shareholding ratio has increased by 13.5%. Circle (CRCL.US) is one of the few targets that are commonly favored. Morgan Stanley increased its holdings from about 1.46 million shares to about 8.32 million shares, and ARK also slightly increased its holdings by about 1% to 4.56 million shares. As for Coinbase, the two institutions operated in the opposite direction. Morgan Stanley reduced its holdings by about 550,000 shares, ARK increased its holdings by about 5.8% to 2.51 million shares, while ARK reduced its RobinHood (HOOD.US) holdings by about 12.8%.

Notably, ARK's circle weight dropped from about 3.34% in the first quarter to 1.85%, but the number of shares increased slightly. The decline in weight was mainly due to the dilution effect of expanding the portfolio size due to the new SpaceX position.

Furthermore, after significantly increasing Circle's position in the second quarter, Morgan Stanley lowered its target price from $106 to $38 in early August. The reason is that the US stablecoin USDC scale contraction revealed the sensitivity of Circle's reserve revenue, and it is expected that its revenue structure will lean towards transaction revenue with lower profit margins.

The entry of new capital is in stark contrast to the wait-and-see of old capital. In the second quarter, Spain's Santander Bank (SAN.US) disclosed Bitcoin and Ethereum ETF holdings for the first time. Although it accounted for a weak share of the US stock market of over 10 billion US dollars, it marked a further penetration of the traditional banking system. UBS's crypto exposure increased quarterly, adding about $1.5 million in positions with mining company AmericanBitcoin (ABTC.US) this quarter. Morgan Stanley built a new Grayscale Solana Staked ETF and Fidelity Solana Fund, with a market capitalization of about 4.25 million and 2.26 million US dollars, respectively; J.P. Morgan also built a new BitWiseSolana staked ETF and bought back XRP from the first quarter to open small positions through Bitwise and Grayscale's XRP funds.

Investment advisory firm EdelmanFinancialEngines disclosed that it holds a spot Bitcoin ETF position of about $34 million, mainly allocated to BlackRock iSharesBitcoinTrust (IBIT) and grayscale-related products. Although this position still accounts for a small share of its overall investment portfolio, it has already surpassed its position on Amazon (AMZN.US) of approximately $25 million. In contrast, Abu Dhabi's Mubadala and Abu Dhabi Investment Commission maintained about 14.722,19,000 iBIT shares unchanged, respectively, totaling about US$764 million. Previously, the pace of increasing positions for several consecutive quarters was suspended in the second quarter.

IBIT of the Harvard University Endowment Fund holds about 3,044,600 shares, worth about US$101.4 million, which is no different from the end of the first quarter, ending two consecutive quarters of holdings. The gold products iSharesGoldTrust (IAU.US) and SPDRGoldTrust (GLD.US) hold a total of about US$171.2 million, which has surpassed Bitcoin holdings, showing its preference for traditional safe-haven assets.

Taken together, institutional actions in the second quarter unleashed several key signals. First, ETF capital flows have been decoupled from institutional behavior, and the institutionalization process of crypto assets is deepening. Institutions no longer simply rely on ETF channels, but allocate them through more complex derivatives and direct positions. Second, institutional differences over crypto-related stock stocks grew. In particular, after the Strategy coin sale incident, the market's confidence in the BTC proxy was impacted, leading to polarization of positions. Finally, Ethereum became a clear buying direction on the institutional side, and capital flow changed in the third quarter. The net inflow of Ethereum ETF was about 365 million US dollars in July, about 243 million US dollars so far in August, totaling more than 600 million US dollars in two months; the price of ETH has rebounded from about 1,570 US dollars at the end of June to around 1,900 US dollars now, an increase of about 20%. Even the stock price of Ethereum treasury company BitMine (BMNR.US) rose from about $13.3 to nearly $19 at the end of June, an increase of about 40%.

This series of changes shows that institutional revaluation of Ethereum is accelerating, its infrastructure value as a smart contract platform is more widely recognized, and it may occupy a more important position in institutional asset allocation in the future. This is another important milestone in the development of the crypto asset ecosystem following the approval of the Bitcoin ETF, which indicates that Ethereum's position in the mainstream financial system will be further consolidated.