The Song Remains The Same, BTC-Led Rally Hits New ATH With Strong Inflows

• The total value of assets held by US-listed spot bitcoin ETFs exceeded $100 billion
• IBIT options saw $1.9 billion in notional volume on their debut day
• MSTR acquired another 51,780 bitcoin for $4.6 billion, raising its holdings to 331,200 BTC

BTC prints another fresh ATH, inflows strong and MSTR takes moar

Crypto markets rallied this week, with the total market cap surpassing $3 trillion, led by bitcoin as its dominance climbed above 60%. Among blue chips, bitcoin hit fresh all-time highs with a weekly gain of 4.1%, while ether declined by 3.8% week on week. At the time of writing, Deribit’s BTC futures contracts expiring in March, June, and September 2025, were trading above $100,000, signaling market expectations that bitcoin’s spot price could surpass this level by the end of March and beyond. Additionally, $100,000 BTC call options on Deribit had an open interest exceeding $2.1 billion.

In the spot ETF segment, bitcoin ETFs recorded $1.09 billion in net inflows over five trading days, with IBIT contributing $1.05 billion. Meanwhile, ether ETFs struggled to attract demand, seeing cumulative outflows of $183.4 million during the same period. The combined value of assets held by the US-listed spot bitcoin ETFs hit $100.55 billion yesterday, representing almost 5.4% of bitcoin's total market capitalization, based on data from SoSoValue.

On Tuesday, options on BlackRock’s IBIT began trading on Nasdaq, with $1.9 billion in notional value changing hands on its debut. According to CNBC, 73,000 IBIT options contracts were traded within the first 60 minutes, placing it among the top 20 most active non-index options. These new contracts allow investors to trade shares of the ETF at predetermined prices, enabling them to speculate on its price movements. Notional exposure refers to the total value of bitcoin represented by the options contracts, reflecting how much market exposure is controlled by those positions. 

The put/call ratio on IBIT’s first day of trading was 0.225, indicating a clear preference for calls, with investors more inclined to bet on bitcoin’s price increase than its decline. While the $1.9 billion debut is impressive, it still falls behind more established ETFs like SPDR Gold Shares (GLD), which saw $5 billion in notional exposure that same day. However, given that IBIT options are in the early stages of their lifecycle, there is significant potential for growth as market adoption increases and investor interest builds over time.

MicroStrategy, the business intelligence software firm known for its significant bitcoin holdings, experienced a surge in trading activity in its stock (MSTR) following its largest-ever bitcoin purchase. The company announced on Monday that it had acquired approximately $4.6 billion worth of bitcoin, marking it its biggest transaction to date. A tweet from a senior Bloomberg analyst revealed that on Wednesday, MSTR had surpassed both NVDA and TSLA to become the most-traded stock by dollar value. The company now holds 331,200 BTC, which were bought at an average price of $49,874 per bitcoin, a total cost of around $16.5 billion, including fees and expenses.

From skepticism to surge, bitcoin ETFs are reshaping Wall Street portfolios

Institutional investors are reshaping their portfolios as bitcoin ETFs gain traction on Wall Street. The most recent 13F filings provide insights into how hedge funds and major financial institutions adjusted their positions in leading bitcoin ETFs during Q3, revealing the growing acceptance of crypto-backed assets. Each quarter, institutional managers with at least $100 million in equity assets must file 13F reports with the US Securities and Exchange Commission (SEC), offering a window into their stock holdings (excluding short positions). These filings are valuable for understanding how some of the largest and most influential investors are navigating the market. This latest round of filings shows how the launch of spot bitcoin ETFs in January has further integrated cryptocurrency into the financial mainstream.

Earlier this week The Block shared a snapshot of how some of the largest hedge funds and financial institutions have changed their Bitcoin ETF holdings in Q3, as of September 30th, 2024.

BlackRock’s iShares Bitcoin Trust ETF (IBIT) leads the pack, with nearly 700 institutional owners collectively holding 160.2 million shares, according to Fintel data. At the time of the report, the ETF managed over $42 billion in assets. Millennium Management remains the largest IBIT holder, adding 12.6 million shares in Q3 to bring its total to 23.5 million shares, valued at $848 million. Founded by Wall Street veteran Israel Englander, Millennium also holds a significant position in the Fidelity Wise Origin Bitcoin Fund (FBTC), with 11.6 million shares worth $644 million. Capula, one of Europe’s leading hedge funds, increased its stakes, acquiring an additional 1.1 million shares in both IBIT ($308 million) and FBTC ($288 million).

On the other hand, some firms have reduced or exited their bitcoin ETF positions. Steve Cohen’s Point72 fully divested from both IBIT and FBTC, while Jane Street nearly liquidated its IBIT holdings, unloading 6.4 million shares. 

Still, Jane Street holds substantial stakes in other bitcoin ETFs, including the ARK 21Shares Bitcoin ETF (ARKB) with 4.4 million shares ($283 million), the ProShares Bitcoin ETF (BITO) with 6.9 million shares ($133 million), and FBTC with 2.5 million shares ($142 million). Tudor Investment Corporation, led by Paul Tudor Jones, holds over 4.4 million IBIT shares, now valued at $230 million. Goldman Sachs expanded its bitcoin ETF holdings, purchasing 5.77 million shares of IBIT, bringing its total stake to 12.7 million shares worth $710 million, making it the second-largest IBIT holder. 

In contrast, Morgan Stanley reduced its bitcoin ETF exposure, selling 449,802 IBIT shares, reducing its portfolio value to $183.39 million, down from $203 million in the previous quarter.

As Bernstein analysts noted this week, “We believe we are done with the Trump election trade here. However, in our view, a ‘new crypto regulatory era’ is far from being priced in. We believe investors should continue holding bitcoin equity proxies for longer horizons, roughly 12-18 months at least.” They further highlighted that with many institutional investors re-evaluating their previous anti-crypto positions, we are only at the beginning of a long journey toward fresh structural allocations in the crypto market. 

As Bernstein puts it, "If you are long, we expect you will be on the right side of Bitcoin history."

Macro pulse 

Among TradFi assets, oil futures rose by 0.7%, while US equities dropped 1.1% over the past week, influenced by ongoing geopolitical uncertainties. The US Dollar Index edged up 20 basis points amid limited macro newsflow and a quiet data schedule for this and next week. 

Several Federal Reserve officials recently spoke, with Cook emphasizing flexibility in monetary policy, noting that it isn’t on a fixed trajectory. Bowman expressed satisfaction with the smaller 25 basis points rate cut in November, highlighting the importance of keeping options open, though she voiced concerns about the Fed’s efforts to fine-tune policy without fully achieving its inflation target. Meanwhile, 10-year US treasury yields slipped by 4 basis points, and the Gold and Silver index surged 5.7% week on week.

^{*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on November 21, 2024} 

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