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BNP Paribas Dips Toe into Bitcoin ETFs
Multinational banking giant BNP Paribas has made a notable move into the world of cryptocurrencies by purchasing shares in BlackRock’s iShares Bitcoin Trust (IBIT), as confirmed by a recent filing with the U.S. Securities and Exchange Commission (SEC).
According to the 13F report submitted by BNP Paribas on May 1, the bank acquired 1,030 IBIT shares in the first quarter of 2024 at a price of $40.47 per share. This transaction amounted to a total investment of $41,684.10, which interestingly falls short of the value of a single Bitcoin at current market rates.
As one of the largest financial institutions in Europe, BNP Paribas ranks second in terms of asset size within the continent. While the allocation to IBIT remains relatively small compared to the bank’s overall investment portfolio, this move is significant as it serves as one of the first documented instances of a major bank purchasing shares in a spot Bitcoin ETF.
Exploring Institutional Investment Strategies
Regulations in the U.S. mandate institutional investors controlling assets worth at least $100 million to disclose their holdings in 13F reports on a quarterly basis. This requirement extends to foreign entities like BNP Paribas when they engage in transactions involving U.S.-based securities, such as purchasing ETFs from American issuers.
Following the approval of several spot Bitcoin ETFs by the U.S. SEC earlier this year, a report from Goldman Sachs highlighted that the adoption of these investment vehicles among institutional players might not occur immediately. Matt Hougan, Chief Investment Officer at crypto fund manager Bitwise, echoed this sentiment by suggesting that the process of incorporating Bitcoin ETFs into institutional portfolios would unfold gradually through meticulous due diligence.
Despite an initial surge of $11.2 billion inflows into Bitcoin ETFs since their introduction, data from Farside Investors reveals that outflows from the Grayscale Bitcoin Trust (GBTC) have surpassed $17.4 billion during the same period. Recent market trends indicate that these ETFs are witnessing a wave of outflows, exemplified by a substantial $563 million withdrawn from the market on a single day.
The retreat of funds from Bitcoin ETFs aligns with broader market movements triggered by decisions from the U.S. Federal Reserve, which has opted to leave interest rates unaltered. Investors have responded by exhibiting caution towards riskier assets like equities and cryptocurrencies.
BNP Paribas’ recent foray into Bitcoin ETFs stands as a noteworthy reversal in stance. A statement from Sandro Pierri, head of fund management at BNP Paribas Asset Management in 2022, had previously emphasized the bank’s reluctance to engage with cryptocurrencies due to perceived lack of client interest. However, the latest investment in IBIT marks a shift in perspective, signaling a new era of exploration within the realm of digital assets for the financial behemoth.
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