A recent report by River revealed that hedge funds and registered investment advisors’ (RIA) exposure to Bitcoin (BTC) via exchange-traded products (ETF) reached $34.3 billion as of Dec. 31, showing a 357% growth last year.
The report highlighted that 458 RIAs have BTC exposure, with the weighted average allocation being 0.02%. Notably, investment advisors’ exposure soared from $2.6 billion in the first quarter to $7.1 billion as of Dec. 31, a 173% increase.
Additionally, 52% of the top 25 RIAs by assets under management have BTC exposure. Yet, as of Dec. 31, only 3% of US-based investment advisors had Bitcoin allocations.
Meanwhile, hedge funds’ exposure rose 455% last year, from $4.9 billion in the first quarter to $27.2 billion. The report noted that only 143 of the over 30,000 hedge funds had BTC investments as of Dec. 31.
Accumulation pattern shift
Unlike previous cycles, institutional accumulation is dominating the current bull run. The report showed that individual investors shed 525,000 BTC in 2024.
This individual exodus was met with 519,000 BTC bought by funds and ETFs, while businesses added 374,000 BTC to their treasuries, 31% more than in 2020.
According to the report, this accumulation shift, combined with the rising interest from hedge funds and RIAs, indicates that institutions are driving Bitcoin prices.
Space for growth
The report highlighted that Bitcoin adoption is only at 3% of its full potential, which combines the total addressable market, institutional underallocation, and global ownership. Considering the $900 trillion global wealth market, BTC represents only 0.2%.
However, the report added that Bitcoin’s addressable market has a $225 trillion market cap, an estimate based on its potential to represent half of the store-of-value assets market. This means that Bitcoin is below 1% of its addressable market, per estimates.
Furthermore, institutional exposure to Bitcoin is just 0.006% of the $128 trillion of US investment advisor money allocated, much smaller than the estimated fair value.
The report stated:
“Increasing this [institutional exposure] to Bitcoin’s current percentage of global wealth (0.2%) would require a 36X rise in exposure, equating to $249 billion in investment.”
Additionally, it highlighted that less than 4% of the global population owns Bitcoin, and individual ownership is likely to increase as people become more aware of its benefits.
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