Bitcoin ETFs: Wall Street Wirehouses Set To Fuel Massive Surge

In the latest episode of the Coinstories podcast hosted by Nathalie Brunell, James Seyffart, a research analyst at Bloomberg Intelligence, outlined why the next significant surge of Bitcoin Exchange-Traded Fund (ETF) adoption is likely to come from major wirehouses, such as UBS, Morgan Stanley, and Merrill Lynch. These large institutions, which typically manage the portfolios of high-net-worth individuals, have not yet broadly recommended Bitcoin ETFs—but Seyffart believes that when they do, it could spark a momentous wave in the market.

Bitcoin ETFs See Record-Breaking Inflows

Discussing the unprecedented success of spot ETFs since they began trading in 2024, Seyffart drew a comparison to gold ETFs launched decades prior. In his words: “My favorite chart of this is if you just look at the gold ETF asset growth over time… Bitcoin ETFs blow away everything you can possibly look at. Even if you adjust inflation-adjust, it doesn’t matter.”

He explained how the most widely traded spot Bitcoin ETF—BlackRock’s IBIT—rapidly approached the asset size of older gold ETFs, underscoring how quickly it gathered investor funds. At its January peak of around $122–123 billion in assets, Bitcoin ETFs were nearing the roughly $130 billion held by early-mover gold ETFs launched in 2004. “IBIT is the fastest ETF to $50 billion as an entire category,” Seyffart noted, emphasizing that the fund met this threshold in a matter of a couple of hundred days. “The previous record was over a thousand days.”

Although the strength of BTC’s price performance helped amplify the total assets under management, Seyffart stressed that the capital inflows themselves were striking. He cited the peak at about “just over $40 billion” of inflows in under a year, with overall spot ETF assets still hovering at more than $100 billion.

While a variety of spot Bitcoin ETFs exist, with numerous asset managers launching their own funds, IBIT has “truly run away” in terms of both assets and liquidity, according to Seyffart. He detailed how funds from Fidelity (FBTC), Grayscale (GBTC), Ark Invest, Bitwise, and VanEck all remain profitable, but none comes close to matching IBIT’s daily trading volume and market depth.

Citing 13F filings—forms certain institutional investors must file with the U.S. Securities and Exchange Commission—Seyffart said that as of late 2024, approximately 25% of ETF holdings can be directly attributed to institutions that meet the filing criteria. He further explained that hedge funds appear to be the single largest identifiable group among those filers: “The biggest holders, ironically enough, are hedge funds… $10 plus billion worth of these things.”

A significant portion of hedge fund interest, according to Seyffart, comes from a “basis trade,” a near-arbitrage strategy in which managers buy the spot Bitcoin ETF while simultaneously shorting the futures market. Because bitcoin futures traded on the Chicago Mercantile Exchange (CME) can carry a premium, traders seek to pocket the spread when the futures contract settles.

He described this approach as “delta neutral,” meaning it does not outright push Bitcoin’s price higher or lower: “It’s basically risk-free… You’re selling forward the futures contracts because there’s a persistent premium and offsetting that with the ETFs. So it shouldn’t really impact price in some massive way.”

The Next Big Catalyst

According to Seyffart, wirehouses and other top-tier wealth managers control trillions in assets, and many of them have yet to systematically offer or recommend Bitcoin ETFs. Current protocol at some of these firms allows clients to request Bitcoin ETF purchases, but does not permit advisors to recommend them proactively. “If you say, ‘You’re my advisor and I want you to put 2% in Bitcoin,’ in most cases they can do that. But they’re not allowed to come to you and say, ‘I recommend it,’” Seyffart noted, referencing how many major brokerages classify Bitcoin-focused investing.

He emphasized that this restriction is likely to ease over time. As soon as the largest wirehouses and brokerages more widely approve of or officially recommend BTC ETF positions—such as a “2% or 5% satellite portion” of a typical portfolio—Bitcoin ETF adoption could surge to new levels.

Seyffart stated: “The next big wave of adoption is […] corporations possibly buying [Bitcoin], obviously nations and states potentially adding this to their balance sheets, is another big thing. But for the ETF side of things, it’s really those wirehouses and advisers; they control trillions of dollars of assets, like they’re the people who manage the money of really wealthy people.”

He added the wirehouses “control the money of centimillionaires, billionaires, you name it—and they are potentially the next wave of adoption for these Bitcoin ETFs,” adding “the ETFs had an absolutely unbelievable first year. We at Bloomberg were pretty bullish; we were more bullish than pretty much any other traditional financial research arm. Not quite as bullish as some of the real, true Bitcoin believers and bulls, but they even blew us out of the water with what they’ve done.”

Ultimately, the Bloomberg Intelligence analyst believes that once America’s largest wirehouses uniformly endorse and recommend Bitcoin ETFs—rather than merely allow them upon client request—the sector could witness “the next big wave” of adoption. With billions of dollars flowing from institutional and high-net-worth portfolios, that wave may well eclipse the record-breaking launch of spot Bitcoin ETFs that took place in 2024.

At press time, BTC traded at $81,901.