Top hedge funds double down on Bitcoin ETFs, led by Millennium’s US$1.7 billion position

Major hedge funds significantly increased their Bitcoin ETF (exchange-traded fund) holdings in Q3 2024, with Millennium Management leading at US$1.7 billion across spot Bitcoin and Ethereum funds.

Millennium more than doubled its iShares Bitcoin Trust position to 23.5 million shares worth US$849 million — part of a broader trend that includes Capula Management’s US$600 million position and Tudor Investment’s five-fold increase to 4.4 million shares.

The surge in institutional interest stems from the “bitcoin basis trade” — an arbitrage strategy where investors buy spot Bitcoin ETFs while shorting cryptocurrency futures. The trade’s spread reached 17% annually on November 11 before settling at 12% on Friday, according to CF Bitcoin data.

“Hedge funds are harvesting that spread. It creates a very tactical, opportunistic trade,” said Gabe Selby, head of research at Kraken’s CF Benchmarks. “It has an uncorrelated return.”

Coinbase’s institutional head of research David Duong reported increased client requests for credit line expansions ahead of the election. 

“Leading into the election, we had multiple clients actually requesting increases in their credit lines (to trade),” he said.

These Q3 positions have likely yielded significant returns, with spot Bitcoin ETFs up approximately 40% since September — driven largely by President-elect Trump’s pro-crypto stance and promises of favorable regulation.

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