Morning Minute: Hedge Funds Left the BTC ETF Trade and Sovereign Wealth Stepped In
Now the BTC ETFs have flipped green for the month after $400M+ inflows this week, setting the stage for a big November.
Between late 2025 and mid-2026, hedge funds decreased their investments in spot Bitcoin ETFs by about 68,000 BTC, according to Galaxy Research research. The primary reason for the reductions was shifting relative-value opportunities, not a change in attitudes towards Bitcoin. Meanwhile, sovereign wealth funds and wealth managers have been increasing their allocations to the cryptocurrency, indicating a shift in the makeup of institutional demand.
As longer-term investors boost their exposure, hedge funds are trimming their trading positions. Although Bitcoin ETF holdings made a slight comeback after June, the market saw a resurgence in net outflows in October, coinciding with a decline in corporate Bitcoin purchases. This has raised doubts about the durability of the recovery.
The focus is now shifting to third-quarter US regulatory filings, due on November 16, which should offer more insight into institutional positioning. If wealth managers continue to accumulate Bitcoin, it could bolster demand for Bitcoin ETFs. However, additional sell-offs by hedge funds could leave the market exposed to further downside risks.
Written by urgent.news from Hedgeweek's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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