Professional investors in the United States holding spot Bitcoin ETFs sharply reduced their positions during the first quarter of the year. According to data compiled by CoinShares, the total asset value managed by these institutional groups dropped by 35 percent, reaching 17.8 billion dollars. During the same period, the share of firms filing 13F disclosures among all US Bitcoin ETF holders declined from 24.7 percent to 20.8 percent.
Hedge funds and brokers at the heart of the decline
The report highlights that this pullback was concentrated particularly among short-term, trade-focused institutions. CoinShares digital asset analyst Matt Kimmell emphasized that the data closely mirrors patterns historically observed during downturns in the Bitcoin market.
Matt Kimmell from CoinShares noted that these figures are consistent with structural shifts seen during previous Bitcoin market declines, observing that leveraged and tactical strategies have tended to unwind sharply in such periods.
Interestingly, nearly 96 percent of the reduction was driven by hedge funds and brokerage firms. Hedge funds slashed their Bitcoin ETF exposure by 31,400 BTC, representing a 39 percent contraction. Brokerages also cut their positions by 18,800 BTC, equating to a steep 53 percent drop in holdings for this group.
In contrast, some investor segments with a longer-term perspective saw far more limited changes. The largest subgroup, investment advisors, retained 150,300 BTC and only modestly trimmed their exposure by 5.9 percent. Banks significantly increased their positions, adding 7,800 BTC during the quarter—more than doubling the amount of Bitcoin ETFs on their balance sheets.
Drop coincides with major Bitcoin correction
The sharp decline in institutional ownership unfolded alongside a major correction in the price of Bitcoin. In the first quarter, Bitcoin’s value fell by 22 percent, briefly dipping below the 60,000 dollar mark and extending a slide that began in late 2025. At its lowest, Bitcoin had shed nearly 50 percent compared to its all-time high above 126,000 dollars in October 2025.
This environment suggested that much of the selloff may have originated from active trading institutions. The fact that hedge funds and brokers slashed their holdings so dramatically pointed to a more volatile and fragile demand for Bitcoin ETFs among short-term players.
Regulatory backdrop turns more constructive
Despite heightened volatility, CoinShares noted several regulatory developments over the quarter that could provide long-term support for the digital asset sector. US regulators made efforts to clarify oversight boundaries between the Securities and Exchange Commission and the Commodity Futures Trading Commission, while also proposing new rules on how digital assets might be treated in retirement accounts.
Mini glossary: A 13F filing is a mandatory quarterly disclosure required from institutional investment managers above a certain size in the US. These filings provide insight into which assets large investors hold and the scale of their positions.
The regulatory agenda remained active after the first quarter ended. This week, the SEC’s draft strategic plan placed digital assets among its institutional priorities through 2030. The document underscored an ambition to create a principled, clear, and consistent regulatory foundation for digital assets and distributed ledger technologies.
In its draft strategic plan extending to 2030, the SEC announced its intent to establish a robust regulatory base for digital assets and distributed ledger technologies with a sensible, consistent, and principle-driven approach.
CoinShares also noted growing acceptance of Bitcoin within traditional finance institutions. Early in the year, BlackRock argued that the classic portfolio mix of stocks and bonds has become less reliable since 2020, suggesting Bitcoin could be part of modern investment strategies. Meanwhile, market observers continue to monitor the fate of the CLARITY Act, draft legislation expected to bring more comprehensive market infrastructure for digital assets. While the bill is now under review by the banking sector, some lawmakers have signaled that it could reach the Senate agenda as early as August.
