Morning Minute: Hedge Funds Left the BTC ETF Trade and Sovereign Wealth Stepped In
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GM!
Today’s top news:
- Crypto majors rebound fall 1-2% alongside stocks; BTC at $80k
- HYPE soars on news of partnership with NYSE to bring perps to the US
- BTC ETFs see another $137M net inflows, flipping October green
- Visa stablecoin settlement volume 10x’s year over year
- YCombinator names its 6 crypto focus areas focused around crypto AI, stablecoins, and tokenization
→Hedge Funds Left the BTC ETF Trade and Sovereign Wealth Stepped In
Every quarter, big institutions have to tell the SEC what they own. Add up those filings from just before Bitcoin’s October 2025 high through the end of June, and the picture is clear: nine hedge funds and banks sold about 68,000 Bitcoin worth of ETF shares over those nine months, roughly $5.4 billion at today’s prices. Millennium, Brevan Howard, Goldman Sachs, D.E. Shaw and five others led the selling. Some trimmed by a third. Some sold everything.
The trade had nothing to do with believing in Bitcoin. You buy the ETF, you simultaneously bet against Bitcoin in the futures market, and you pocket the gap between those two prices. Done right you make money whether Bitcoin rises or falls—as long as the gap beats what you’d earn just parking the cash in Treasury bills.
Before the high, that gap paid 7.9% a year, a full 3.9 points better than T-bills. By late October it paid 4.8%, barely half a point better. After fees and financing, Galaxy’s Alex Thorn figures what’s left is about 1.5 points over cash. Not worth the trouble.
“That arithmetic, not the price, is why the multi-strategy desks left,” he wrote.
You can see it in the futures data too. Both sides of that trade shrank by nearly identical amounts, around 57% each.
Now look at who came in and bought. Morgan Stanley’s wealth management arm. Mubadala. The Abu Dhabi Investment Council. Roughly 2,200 other filers added about 20,000 Bitcoin between them. Hedge funds sold; sovereign funds and wealth managers bought. And the investors too small to file at all—advisers, family offices, regular people—cut their holdings by just 6.6% while the price fell 49%. So Middle America is hodling.
That’s the whole story. The people who were never really Bitcoin investors left. The people who were didn’t flinch.
Since June, the funds have added back 87,000 Bitcoin—this time as straightforward buying, not arbitrage.
The rate picture is turning too. The Fed held Wednesday, but December has quietly softened: a month ago traders put 59% odds on two rate hikes by year-end. Today that’s zero. Expected tightening has been cut roughly in half. Less tightening helps every risk asset.
October’s flows already show the shift. The month was down $907 million at the midpoint. Through Tuesday it’s essentially flat, with $724 million arriving in just the last eight sessions.
The fast money is gone. The believers are left. And that’s the foundation you can build on for a bull market rally…
🌎 Macro Crypto and Markets
- Crypto majors are red though HYPE is soaring on NYSE partnership; BTC -1.6% at $80k; ETH -2% at $2,320; SOL -3% at $100; HYPE +7% at $88; ZEC -3% at $1,270
- Top alt movers include PI (+3%), SPX (+4%) and STABLE (+2%)
- Oil even at $102; Gold -0.1% at $4,040
- Stock futures are red after Google fell 7% post earnings; DOW -0.28%, Nasdaq -1%
- The Fed held rates at 3.75%–4.00% in a 10-2 vote with both dissenters favoring another quarter-point hike
- NYSE parent Intercontinental Exchange is partnering with Trade.xyz to launch regulated perpetual futures in the U.S., per Bloomberg, with the venue running on Hyperliquid’s infrastructure and offering contracts pegged to equities, indexes, commodities and FX, pending regulatory approval, and ICE taking an equity stake in Trade.xyz on undisclosed terms
- CZ said the real demand for tokenized U.S. stocks comes from outside America, telling The Rollup’s Andy that people abroad struggle to open U.S. brokerage accounts and noting that some countries with over 100 million people have stock markets trading just $50 million a day, while arguing tokenization could also open markets for assets with no real venue at all, like water and rare earth minerals.
- JPMorgan, Coca-Cola, Dell, AMD, Adobe, Applied Materials and Sandisk joined the issuers blocking tokenized versions of their shares on the OKX-ICE venue, taking the count to 33 in thirteen days
- Visa’s stablecoin settlement volume has passed $25B annualized, more than 10x where it was last year
- Y Combinator named six crypto priorities for the next six months in its October request for startups: AI-powered fundraising, USD and non-USD stablecoins, stablecoin neobanks, real-world asset tokenization, trading platforms, and API infrastructure for AI agents; arguing growth is now driven by institutional adoption rather than retail speculation
- A new Ipsos survey for the DeFi Education Fund found 22% of American adults have tried crypto, up from 18%, while past-year usage stayed flat at 13%; meaning essentially all the growth came from people who tried it and walked away.
- Blockchain data provider Allium, whose customers include Visa, Stripe and Coinbase, disclosed unauthorized access to its systems on October 25 and revoked every existing API key, telling customers to reset passwords, enable multifactor authentication and issue new credentials
Corporate Treasuries & ETFs
- The Bitcoin ETFs saw $137M in net inflows on Wednesday; the ETH ETFs saw $21M in net outflows
- Strategy shareholders approved letting its four preferred stocks accrue dividends every calendar day including weekends, with 99.3% voting in favor, a change that takes STRC from 24 dividend record dates a year to 365 in an effort to dampen volatility in the shares
Meme Coin Tracker
- Meme leaders were red; DOGE -2%, SHIB -2%, PEPE -1%, PENGU -1%, TRUMP -2%, SPX +3%, BONK -1%
- Robinhood chain leaders were mixed; Pons -5% to $185M; Cashcat even at $100M; AI +3% at $72M; Standard +10%, Stonkbroker +7% and Pizza +275x led top movers
- Solana top movers included Dubble +100x, Float +150x, GTA6 +100% and Catbot +700%; Stonk +20% to $160M
💰 Token, Airdrop & Protocol Tracker
- Pump.fun introduced Perps for the Pump app, powered by Hyperliquid and offering up to 20-40x leverage on cypto majors; perps callouts will also earn callout rewards
- Hyperliquid led onchain protocols in revenue with $2.04M, followed by Pump.fun at $1.71M and Collector Crypt at $427k
- Birch Hill, founded by Goldman Sachs and BlackRock alumni, raised $4 million led by Multicoin Capital to bring U.S. apartment, farm and energy loans onto public blockchains
- Moody’s assigned Ripple’s RLUSD an A2 long-term and P-1 short-term rating a day after the OCC approved its national trust bank, citing reserves held mostly in Treasury bills at BNY and a 103% coverage target
🚚 What is happening in NFTs?
- NFT leaders were mixed; Punks -4% at 29.3 ETH, BAYC +3% at 6.35 ETH, Pudgy even at 2.53 ETH
- OSF Red Light District (+150%) and Musegod Muses (+141%) led top movers
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