• In the third quarter, institutional investors increased their holdings of Ethereum by 19%

  • According to SEC filings, institutional Bitcoin holdings fell last quarter while many of the same firms increased their stakes in Ethereum-based products.

    The number of Grayscale Bitcoin Trust shares held by large institutions fell 2.6 percent in the third quarter, while the number of Grayscale Ethereum Trust shares increased 19% from the previous quarter.

    Using today’s share prices for the two trusts, large institutional investment managers reported $546.8 million in GBTC and $74.6 million in ETHE. Firms with at least $100 million in assets under management must file a 13F form within 45 days of the end of the quarter to disclose the contents of their portfolio.

    Ten new firms disclosed ETHE in their portfolios in the most recent round of regulatory filings. Tocqueville Asset Management, based in New York, held 79,398 shares of the Ethereum trust, while Main Management ETF Advisors, based in San Francisco, held 78,000 shares.

    The growing interest in having indirect exposure to Ethereum through the trust could be attributed to the institutional excitement surrounding DeFi, a catch-all term for financial products that allow their users to borrow, lend, or trade crypto assets without the use of an intermediary. As Liam Kelly pointed out in the DeFi Friday newsletter last month, determining how to safely custody a yield-generating DeFi token remains a formidable challenge for many banks and investment managers.

    Meanwhile, several companies appear to have sold all of their GBTC stock. Outlook Wealth Advisors, LLC, based in Texas, sold 60,000 shares of GBTC and reported that it now owns 60,000 shares of mining and software development company Bitcoin Services Inc. (BTSC).

    At the start of the year, Bitcoin and Ethereum exposure was mostly represented by the two Grayscale trusts. But, at least in the case of Bitcoin, this is beginning to change. Bitcoin Services Inc., 3iQ’s The Bitcoin Fund in Toronto, XTRA Bitcoin Inc. in Idaho, and Osprey Bitcoin Trust in New York accounted for $17.5 million of the holdings reported in the third quarter.

    Cathie Wood’s ARK Invest remains the firm with the most individual stake in Bitcoin and Ethereum-based investment products. ARK’s holdings comprise 82% of all GBTC shares and 42.6 percent of all ETHE shares.

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