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Capula Management’s Strategic Investment in Bitcoin ETFs
In the second quarter of 2024, Capula Management, recognized as the fourth-largest hedge fund in Europe, made a significant move by acquiring more than $464 million in spot Bitcoin exchange-traded funds (ETFs). This information was disclosed in a filing submitted to the US Securities and Exchange Commission (SEC) on August 5, detailing the firm’s financial positions.
The filing revealed that Capula holds a substantial 4,022,346 shares in the Fidelity Wise Origin Bitcoin ETF (FBTC), which is estimated to be worth around $211 million. Additionally, the firm possesses 7,419,208 shares in BlackRock’s iShares Bitcoin fund, totaling approximately $253 million. These 13F filings, which are submitted quarterly by institutional investment managers that manage at least $100 million in equity assets, provide insights into the long positions held in US equities and options, albeit lacking information on short positions. This means that while they offer a glimpse into an investment manager’s portfolio, they do not present a complete picture.
Institutional Interest in Bitcoin ETFs Grows
Capula’s recent disclosures highlight a growing trend among institutional investors who are increasingly showing interest in US spot Bitcoin ETFs. For instance, last month, the State of Michigan Retirement System announced its investment of $6.6 million in the ARK 21Shares Bitcoin ETF (ARKB) in a similar SEC filing.
As of 2024, Capula Investment Management LLP, a British hedge fund, manages approximately $30 billion in assets, underscoring its significant presence in the investment landscape.
Market Dynamics and Trading Volumes
The appetite for Bitcoin ETFs among institutional investors remains robust, even in the wake of Bitcoin’s recent price volatility, which saw it dip to a six-month low of below $50,000 before bouncing back to over $54,000 at the time of reporting. Eric Balchunas, an ETF analyst from Bloomberg, pointed out that the trading activity for these investment products indicates a strong involvement from the community, with nearly $2.5 billion being traded during market open hours.
However, Balchunas cautioned that high trading volumes during market downturns might be indicative of fear among investors. On the flip side, such liquidity is a characteristic that traders and institutions appreciate in ETFs. He noted, “If you are bullish on Bitcoin, you actually don’t want to see excessive trading volume on down days, as ETF volume during these times often reflects market anxiety. Conversely, having deep liquidity on challenging days is appealing to traders and institutions, so a balance of volume is necessary for long-term health.”
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