Over the past week, over 600 firms revealed that they have invested billions in spot Bitcoin exchange-traded funds (ETFs). Millennium Management made the largest investment of $1.9 billion. Bitcoin ETFs have also seen a surge in trading volumes, reaching $5.65 billion on May 16. This increase in volume suggests a shift from on-chain accumulation to ETF trading. Additionally, venture capital funding in the crypto space is booming, with impressive investments in blockchain infrastructure, decentralized finance, and Web3 gaming projects.
Firms Invest $3.5 Billion in Bitcoin ETFs
Over the past week, more than 600 firms reported that they have investments in spot Bitcoin exchange-traded funds (ETFs) in their 13F filings with the United States Securities and Exchange Commission (SEC). In fact, these filings revealed that professional investment firms own about $3.5 billion worth of Bitcoin ETFs. Some of the more well known investors include Morgan Stanley, JPMorgan, Wells Fargo, UBS, BNP Paribas, Royal Bank of Canada, and hedge funds like Millennium Management and Schonfeld Strategic Advisors.
Millennium Management is the largest BTC ETF investor, with a total investment of $1.9 billion. This includes $844.2 million in BlackRock’s iShares Bitcoin Trust (IBIT), $806.7 million in Fidelity’s Wise Origin Bitcoin Fund (FBTC), $202 million in the Grayscale Bitcoin Trust (GBTC), $45 million in the ARK 21Shares Bitcoin ETF (ARKB), and $44.7 million in the Bitwise Bitcoin ETF (BITB).
Schonfeld Strategic Advisors is the second-largest spot BTC ETF investor, holding $248 million in BlackRock’s ETF and $231.8 million in Fidelity’s fund, totaling $479 million.
Boothbay Fund Management, based in New York, has a $377 million total investment in spot Bitcoin ETFs, with $149.8 million in IBIT, $105.5 million in FBTC, $69.5 million in GBTC, and $52.3 million in BITB. Pine Ridge Advisers, another New York-based firm, announced a $205.8 million investment in spot Bitcoin ETFs, with $83.2 million in IBIT, $93.4 million in FBTC, and $29.3 million in BITB.
Morgan Stanley invested an impressive $269.9 million in GBTC, making it one of the largest GBTC holders. Aristeia Capital, an alternative asset manager, has a $163.4 million investment in IBIT.
Graham Capital Management invested $98.8 million in IBIT and $3.8 million in FBTC, while CRCM declared a $96.6 million investment in IBIT. Fortress Investment Group, based in New York, has a $53.6 million investment in IBIT.
Bitcoin ETFs See Volume Surge
Bitcoin ETFs are also experiencing a surge in volumes. According to data from research firm Santiment, the seven largest U.S. spot Bitcoin ETFs managed a combined volume of $5.65 billion on May 16, which is the highest volume seen since Mar. 24, around the time Bitcoin reached its new all-time high.
Santiment believes that this uptick in volume signifies that the days of whales only accumulating on-chain are over. Hedge fund manager Thomas Kralow seems to agree with this as he sees the surge in trading activity as a very positive market indicator. Adding to BTC’s bullishness is the fact that the spot ETFs have seen consistent positive inflows every day this week.
Even the Grayscale Bitcoin Trust (GBTC), which has been struggling under the weight of massive outflows showed modest interest, with $27 million and $4.6 million in inflows on May 16 and 17, respectively.
Crypto VC Funding Soars
It is not just Bitcoin ETFs attracting the attention and the funds of investors, but the industry as a whole. Venture capital (VC) funding rounds are surging as the crypto bull market looks like it might reignite.
On May 16, crypto venture firm Aquarius announced a $600 million multistrategy liquidity fund that will enhance on-chain liquidity for blockchain foundations and ecosystem projects. Supported by Bitrise Capital, leading miners, family offices, and influencers, this fund will aid blockchain infrastructure, decentralized finance, artificial intelligence, the Bitcoin ecosystem, modular architecture, and early-stage data layer projects.
The bullish trend in the crypto market is also reflected in increased funding for various projects. VC funding surpassed the $1 billion mark for the second consecutive month, with April seeing $1.02 billion across 161 investment rounds and March $1.09 billion. The last time VC funding was this high was in 2022.
Earlier this month, digital securities platform Securitize raised $47 million in a funding round that was led by BlackRock. There was also participation from companies like Aptos Labs, Paxos, and Circle.
Additionally, Puffer Finance, a liquid staking project on Ethereum layer-2 solution EigenLayer, secured $18 million in a Series A round from Coinbase Ventures and Kraken Ventures. This funding supports Puffer Finance’s technology that reduces the capital requirement for Ethereum validators to just 1 Ether, which is much lower than the usual 32 ETH.
Since Bitcoin’s plunge below $16,000 after the FTX collapse in November 2022, it has gained over 300%, driven by the approval of spot Bitcoin exchange-traded funds and the repayment of creditors from the defunct exchange. Now, some VCs predict the current bull market might lead to another initial coin offering boom that could potentially surpass the highs of early 2018.
Param Labs
This trend can also be seen in the Web3 gaming industry. Param Labs, a gaming infrastructure developer, successfully raised $7 million in a very ‘oversubscribed’ investment round. The round was led by crypto venture capital firm Animoca Brands, but firms like Delphi Ventures, Cypher Capital, P2 Ventures, Mechanism Capital, Merit Circle, TRGC Capital, Double Peak Group, and MH Ventures also participated.
This funding will help deal with the critical shortage of underlying infrastructure in Web3 gaming, which makes modular gaming ecosystems like Param as vital for the next generation of Web3 games. Anthony Anderson, the CEO of Param Labs and Kiraverse, pointed out that unlike most Web3 studios that focus on single game titles, modular ecosystems offer a number of products and components, allowing developers to build their own games and providing essential tools for other developers.
The funding round happened as the Param Gaming Platform experienced some impressive growth. In fact, it recently surpassed 300,000 daily active users and 2.5 million followers on its X page.
Strategic investments were also made by Animoca Labs co-founder Yat Siu and Face Clan founder Richard Banks. Yat Siu is very excited about the partnership with Param Labs, and believes it has the potential to advance digital property rights in gaming and move closer to a truly open metaverse.
The lack of Web3 gaming infrastructure presents a big challenge for blockchain integrations, and it hinders mainstream adoption. This is why Anderson believes that focusing on infrastructure is crucial, as it can be applied to numerous experiences beyond just the games they develop, thereby boosting blockchain gaming adoption.
A recent post by Wanderers game founder Nick Greenawalt humorously shed some light on the current infrastructure issues by showing gameplay interrupted by frequent MetaMask wallet prompts.
For true mainstream adoption, Web3 games have to integrate crypto assets and Web3 technology organically, without disrupting the user experience. Anderson pointed out that gamers should be able to interact with on-chain assets effortlessly, benefiting from features like trading assets with friends and monetizing in-game time without realizing they are engaging with blockchain technology.
