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Millennium, Goldman Sachs, Tudor, and six other companies reduced their spot Bitcoin ETF holdings equivalent to 68,000 Bitcoin, exceeding the total reduction of 48,000 Bitcoin across all 13F filers.
Morgan Stanley’s wealth management division, Mubadala, and the Abu Dhabi Investment Council were among the buyers.
Galaxy stated that the sellers exited because the futures basis narrowed to just 0.6 percentage points above short-term U.S. Treasury bills, rather than due to a loss of confidence in Bitcoin.
Investors who sold Bitcoin during its 2026 decline were not the type you might expect.
A report released by Galaxy Research on Monday found that several hedge funds and banks nearly dominated all institutional selling in U.S. spot Bitcoin ETFs, while wealth platforms and sovereign funds entered the market as buyers.
Nine companies collectively accounted for more than the entire decline: Millennium Management, Brevan Howard, Goldman Sachs, Capula Management, Farallon Capital, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments, and Tudor Investment.
These institutions collectively reduced their exposure by 68,000 bitcoins, equivalent to approximately $5.4 billion at current prices, with reductions ranging from 29% to 100%. This implies that the remaining approximately 2,200 filers collectively increased their holdings by about 20,000 bitcoins, valued at around $1.6 billion.
Morgan Stanley’s wealth management division, Mubadala of Abu Dhabi, and the Abu Dhabi Investment Authority are among the buyers. Advisors, family offices, and individuals who do not file 13F reports reduced their holdings by only 6.6% despite Bitcoin’s 49% price decline.
Alex Thorn, head of institutional research at Galaxy, said that most sellers are trading rather than betting on Bitcoin itself. Many are employing a cash arbitrage strategy: buying spot ETF shares while shorting CME Bitcoin futures to profit from the price differential, or basis, between the two.
But this spread has nearly disappeared. In the 30 days leading up to Bitcoin’s peak, the annualized average of the nearby basis was 7.9%, 3.9 percentage points higher than U.S. Treasury bills. In the 30 days leading up to October 21, this figure averaged 4.8%, just 0.6 percentage points above Treasury yields. The report estimates that, after accounting for fees, rollover costs, and margin, this trade now yields only about 1.5 percentage points more than cash.
Thorn wrote: "It wasn't the price, but this arithmetic calculation that caused the multi-strategy trading desk to exit."
Data from the CFTC on CME Bitcoin futures also shows a similar trend. The net long positions of asset management firms fell by 57%, from 43,300 bitcoins during the week Bitcoin hit its all-time high to 18,400 bitcoins. The net short positions of leveraged funds—representing the futures side of arbitrage trades—also decreased by the same magnitude, dropping from 71,400 bitcoins to 30,600 bitcoins. Open interest declined by 28% in bitcoin terms and by 51% in dollar terms.
Longer-dated futures still offer some yield. As of the close on October 21, the November and December futures were priced to imply an annualized yield of 6.3% to 6.5%, approximately 2 percentage points higher than Treasury yields before costs. However, Thorn believes this modest advantage is insufficient to compensate for the tail risk of this trade: in December 2022, the basis had inverted to an annualized negative 31%.
Overall, spot ETF holdings have declined by only 11% from their October 2025 peak to the July low, while Bitcoin fell 53% over the same period. Since the June low, these funds have added 87,000 Bitcoin, which Galaxy describes as directional buying rather than arbitrage trading.
Recent capital flows have been volatile. Decrypt previously reported that earlier this month, these ETFs saw nearly $1 billion in outflows over a two-week period, followed by their best single-day performance in nearly a month on October 19, when only BlackRock’s IBIT experienced inflows. After three consecutive days of combined $1 billion in inflows, a significant outflow followed. This week, BTF ETFs have again turned positive in terms of capital flows, but on a smaller scale: approximately $286 million has flowed in so far.
The 13F data is current through June and therefore does not reflect more recent changes. Galaxy disclosed that it holds Bitcoin.