Bitcoin ETFs are experiencing an interesting change in ownership. Some of Wall Street’s biggest trading firms have been reducing their positions, while sovereign wealth funds and wealth managers are quietly increasing theirs.
At first glance, declining institutional holdings might suggest that investors are losing interest in Bitcoin. But the latest research from Galaxy tells a more complicated story.
The investors leaving the market appear to be motivated largely by shrinking trading profits, while other institutions are treating Bitcoin as an investment worth holding through volatility.
We believe the difference between these two groups deserves more attention than the selling figures alone.
TL;DR
Nine major Wall Street firms reduced their spot Bitcoin ETF exposure by approximately 68,000 BTC between September 2025 and June 2026.
Sovereign investment funds and wealth managers increased their holdings, with other reporting institutions collectively adding 20,000 BTC.
Declining profits from Bitcoin futures arbitrage appear to be a major reason behind the institutional selling.
Why Are Major Wall Street Firms Selling Bitcoin ETFs?
According to Galaxy Research, institutions reporting their holdings to the US Securities and Exchange Commission owned approximately 355,000 BTC-equivalent in spot Bitcoin ETFs at the end of September 2025.
By June 2026, that figure had dropped to around 307,000 BTC, a decline of 14%.
However, just nine financial firms accounted for 68,000 BTC in reduced exposure, exceeding the overall institutional decline of 48,000 BTC.
Those firms included Goldman Sachs, Millennium Management, Brevan Howard, and Tudor Investment.
That means the remaining institutional investors collectively increased their exposure rather than following the largest sellers.
For us, this is the most revealing part of the research. Institutional Bitcoin demand hasn’t disappeared; ownership is shifting between different types of investors.
The Trading Strategy Behind The Sell-Off
One reason for the selling involves a strategy known as the cash-and-carry trade.
Instead of purchasing Bitcoin ETFs solely because they expect prices to rise, some hedge funds simultaneously buy spot exposure and sell Bitcoin futures.
The goal is to capture the difference between the two prices while limiting exposure to Bitcoin’s direction.
This strategy becomes less attractive when futures premiums decline.
In Galaxy Research’s analysis, the annualized premium on front-month Bitcoin futures fell from an average of 7.9% before Bitcoin’s October 2025 peak to 4.8% in the 30 days ending October 21, 2026.
That left only a small advantage over short-term US Treasury bills, even before trading expenses.
For some institutions, maintaining the positions simply stopped making financial sense.
We shouldn’t automatically interpret those sales as a negative forecast for Bitcoin’s price.
Sovereign Funds See A Different Opportunity
While trading-focused institutions reduced exposure, several longer-horizon investors moved in the opposite direction.
Morgan Stanley’s wealth management business, Abu Dhabi’s Mubadala, and the Abu Dhabi Investment Council were among the buyers identified in Galaxy’s research.
Across other reporting institutions, approximately 20,000 BTC-equivalent was added during the period.
These purchases suggest that some investors continue to view Bitcoin ETFs as a useful way to gain cryptocurrency exposure through established financial markets.
Sovereign funds and wealth managers can have different investment objectives from hedge funds.
Rather than relying on short-term price differences, they may focus on portfolio diversification and longer-term opportunities.
Of course, institutional purchases don’t guarantee that Bitcoin prices will rise.
Still, we see an important distinction between investors closing a trading strategy and investors abandoning an asset altogether.
Bitcoin ETF Investors Have Held Up Better Than Prices
Galaxy’s research also points to a surprising difference between Bitcoin’s price performance and ETF ownership.
From the October 2025 peak to the July 2026 trough, Bitcoin ETF holdings declined approximately 11%, while Bitcoin’s price fell around 53%.
That suggests ETF investors, as a group, held on to much more of their exposure than the price decline might imply.
The funds have also accumulated approximately 87,000 BTC since Bitcoin’s June low.
We find this especially interesting because the increase occurred while leveraged futures positions were shrinking.
It raises the possibility that recent buying reflects more direct investment demand rather than another wave of arbitrage activity.
For readers tracking Bitcoin news, these ownership patterns offer useful context beyond daily ETF inflow and outflow figures.
What Could This Mean For Bitcoin’s Next Move?
The next round of institutional filings will help determine whether this shift is continuing.
Current comparisons rely on holdings reported through June 2026, so they don’t fully capture how institutions positioned themselves during the third quarter.
We’ll be watching whether sovereign funds and wealth managers continue accumulating while hedge funds remain less active.
A recovery in futures premiums could also bring trading firms back into the market.
However, the larger question is whether Bitcoin ETFs are developing a more stable base of investors.
As we follow developments across the cryptocurrency market and the blockchain industry, we think the changing composition of institutional ownership will be an important trend to monitor.
Bitcoin’s future won’t depend on one category of investor. But understanding who is buying, who is selling, and why can give us a clearer picture of the market.
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