Hedge funds, including Millennium Management, Capula, and Tudor Investment, are piling up US spot Bitcoin ETFs into their portfolio post US election.
This move is likely fuelled by optimism for a profitable Bitcoin basis trade strategy as the cryptocurrency rose to an all-time high (ATH) of about $93K last week.
Hedge Funds Like Millennium, Capula, And Tudor Increase Their Bitcoin ETF Holdings
The recent political shifts in the US have impacted the US Bitcoin exchange-traded fund (ETF) market significantly, partly due to President-elect Donald Trump’s pro-crypto stance.
Barely two weeks after the US presidential election that saw Trump’s victory, hedge funds, such as Millennium Management, Capula Management, and Tudor Investment, have upped their US spot Bitcoin ETFs portfolio in the third quarter, according to their securities filings.
The hedge funds want to take advantage of the election-driven arbitrage trade. During the election campaign, Donald Trump did not only embrace cryptocurrencies, especially Bitcoin but also promised to adopt the crypto for national reserve and make crypto-friendly regulations.
Trump’s election victory triggered a bullish movement in the crypto market, where Bitcoin surpassed the $90K critical level to reach an ATH of about $93K last week. However, Bitcoin has shed some gains and is currently trading at $91,807.38, according to Tradingview.
Although BTC has slightly dropped in price, the post-election rally fuelled a surge in a popular arbitrage trade targeting price gaps between spot BTC and the BTC futures.
The Bitcoin basis trade strategy involves buying spot BTC ETFs while shorting Bitcoin futures, which have been trading at a premium throughout the year.
According to CF Bitcoin data, shortly after the election, this price difference between the spot Bitcoin ETF and Bitcoin futures spiked, with annualized spreads of about 17% on November 11 before easing to 12% on Friday.
New York-based hedge fund Millennium Management, led by Israel Englander, more than doubled its investment in BTC ETFs, increasing its stake in the iShares Bitcoin Trust (IBIT.O) to 23.5M shares, valued at $849M.
The firm also increased its holdings in ARK 21Shares Bitcoin and Bitwise Bitcoin funds, closing the Q3 with $1.7B in crypto ETFs. However, this represents a small fraction of its $70B in AUM.
Capula Management added shares in the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund, totaling $600M in positions, according to an SEC filing on Thursday.
Tudor Investment, led by Paul Tudor Jones, quintupled its exposure to the iShares Bitcoin Trust, amassing 4.4M shares.
Schonfeld Strategic Partners also added to its BTC fund holdings.
Increasing Institutional Interest
The regulatory optimism following the US elections, which fuelled the recent surge in the price of Bitcoin, did not only attract hedge funds into the spot Bitcoin ETF market but also attracted more institutional interest.
For instance, MicroStrategy Chairman Michael Saylor recently announced that it acquired approximately 27,200 Bitcoins for around $2.03 billion in cash between October 31, 2024, and November 10, 2024 – just 11 days.
