Hedge funds unloaded 31,400 Bitcoin during the first quarter of 2026 while banks more than doubled their holdings in spot Bitcoin ETFs over the same period, according to regulatory filings compiled by GFdaily. The divergence suggests a sharp split in institutional conviction about the largest cryptocurrency by market cap — a split that could shape price action through the rest of the year.
The sell-off in numbers
The 31,400 BTC that hedge funds sold in Q1 represents roughly $2.1 billion at current prices. The selling was spread across a range of multi-strategy and macro funds, not concentrated in one or two big names. That broad-based exit suggests the move wasn't driven by a single redemption or strategy shift, but a more general recalibration of risk appetite among levered players.
Banks went the other way
Meanwhile, U.S. banks — including regional lenders and at least one of the big four — increased their ETF positions by a factor of two during the same three months. The exact dollar figure isn't public, but the doubling of share counts shows that the regulated banking sector is treating Bitcoin ETFs as a long-term portfolio asset, not a short-term trade. Several banks started from very small bases, so the percentage jump partly reflects that; still, the direction is unambiguous.
Why the split matters
Hedge funds and banks operate on different time horizons. Funds are judged quarterly; banks manage multi-year balance sheets. So when hedge funds sell and banks buy, it usually means short-term uncertainty is clashing with longer-term conviction. Q1 saw Bitcoin trade in a wide range — from around $65,000 to nearly $85,000 — and that volatility likely triggered fund stops or profit-taking. Banks, constrained by custody and compliance hurdles, move slower but often stay put once they've allocated.
What comes next
Q2 data, due in August, will show whether the trend continued. If hedge funds kept selling into April and May — when Bitcoin dipped below $60,000 briefly — that could signal further downside. If they reversed and started buying, the ETF inflows from banks might have more company on the long side. For now, the market is watching whether the bank buying is enough to absorb the fund selling. So far, it's been a standoff.
