Wall Street Funds Dumped Bitcoin ETFs — Government Funds Bought In
A few big hedge funds sold most of the Bitcoin ETF shares, while sovereign wealth funds and wealth managers stepped in to buy.
Image source: Decrypt
When Bitcoin's price dropped sharply in 2026, you might expect panicked investors to be the ones selling. But a new report from Galaxy Research shows the sellers were actually a small group of powerful hedge funds (private investment firms for wealthy clients) and banks.
Meanwhile, big buyers stepped in — including sovereign wealth funds (government-owned investment funds from countries like Abu Dhabi) and wealth management platforms.
The key numbers:
- Big institutions held 355,000 BTC worth of spot Bitcoin ETF shares in September 2025, falling to 307,000 BTC by June 2026 — a 14% drop.
- Just nine firms (including Millennium, Goldman Sachs and Tudor) sold 68,000 BTC, worth about $5.4 billion.
- Buyers included Morgan Stanley's wealth arm, plus Abu Dhabi's Mubadala and Abu Dhabi Investment Council.
Why did these funds sell? According to Galaxy, it wasn't because they lost faith in Bitcoin. They were running a trading strategy called cash-and-carry — buying Bitcoin ETF shares while betting against Bitcoin futures to pocket the small price gap between the two (called the "basis").
The problem: that gap nearly disappeared. The profit shrank to just 0.6 points above what you'd earn from safe U.S. government bonds. After fees, the trade barely paid off — so the funds simply walked away.
The takeaway: The selling was about math, not panic. Everyday investors and advisers barely sold at all (just 6.6%) even as prices fell 49%. And since June, the ETFs have added back 87,000 BTC, which Galaxy calls real buying rather than trading tricks.
In short: short-term traders left because the easy profit vanished, while long-term buyers like governments quietly moved in.
This is an AI-generated summary. Read the original article at: https://decrypt.co/382059/wall-street-fast-money-fled-bitcoin-etfs-sovereign-funds