Why Wall Street Bought More Bitcoin While It Crashed

So they bought more while the price went south — why?

Call it optimism, stubbornness, or a spectacular case of “buy the dip.” During the last quarter of 2025, professional managers actually increased their exposure to US spot Bitcoin ETFs even as Bitcoin itself took a cliff dive. The token went from a stratospheric October peak (north of $126,000) to trading below $90,000 by year-end after a savage deleveraging and a wave of liquidations. And yet, institutional ETF share counts went up. Wild, right?

The filings paint the picture: 121 institutions reported a combined net increase of about 892,610 ETF shares from Q3 to Q4 of 2025. Their total share count rose from roughly 5.25 million to about 6.14 million — roughly a 17% lift in units held. But here’s the twist: the dollar value of those holdings actually fell, from about $317.8 million to $298.6 million. That means the average implied price per ETF share plunged from around $60.50 to about $48.60 — a near 20% haircut. Translation: they bought more tokens at much lower prices, and the paper value still fell.

Concrete examples make this even odder. Big-name funds were still pulling in cash: one major Bitcoin ETF drew tens of billions in fresh inflows and ranked among the top ETFs by net new money, even while showing a yearly loss of about 10% for holders. Some traditionally cautious allocators — including a multi-billion-dollar college endowment — popped open the checkbook for millions in ETF shares. So yes: piles of cash flowed in, but the market’s mark-to-market math made those piles look smaller on paper.

Okay, but is this bullish conviction or a financial magic trick?

Short answer: both. Long answer: 13F filings (the quarterly forms that show long US equity positions) only reveal one side of the ledger. They show the long ETF positions, but not any short bets managers might be running elsewhere. That opens the door to a common hedge-fund playbook: buy the ETF and short Bitcoin futures at the same time to capture the spread between the spot ETF price and futures — a basis trade. The long leg shows up in filings; the short doesn’t. Boom — it looks like loads of new buyers, even if the players are actually market-neutral arbitrageurs.

So which camp are these flows from — the money that really wants to own Bitcoin for the long haul, or the kind that treats ETFs like a spot-futures vending machine? It matters. Genuine allocators tend to be sticky: they stick around, rebalance, and add slowly. Arbitrage capital is mercenary: it can vanish the instant volatility spikes or the spreads evaporate.

There are other forces at work too. Options dealers, for example, tend to sell into rallies as part of risk management, which can put an artificial lid on big price moves and make things choppier than they need to be. So you get this weird ecosystem where billions of dollars flow into ETF units, other desks are mechanically selling into rallies, and some players are simultaneously hedging away directional risk — all at once.

What to take away? Institutions buying more ETF shares during a brutal drawdown isn’t a simple, single-sentence bullish stamp of approval. Sometimes it’s genuine conviction: big managers and endowments deciding they want crypto exposure inside a regulated wrapper. Other times, it’s arbitrage and hedge-fund plumbing that shows up in filings but doesn’t mean anyone is actually long-term bullish on the token itself.

Either way, the headline is deliciously ironic: a quarter where Bitcoin lost roughly a quarter of its value ended with Wall Street owning a larger slice of the ETF pie. Whether that ownership sticks around — and whether it helps or hinders future price discovery — depends on who’s actually doing the buying and how long they plan to stay.

One final nugget: markets are ecosystems, not monoliths. Buy flows, sell-side hedging, derivative strategies, and retail noise all collide. That makes interpreting quarterly filings equal parts detective work and fortune-telling. Bring popcorn.