Despite one of the most significant annual declines for cryptocurrency, two sovereign investors in Abu Dhabi maintained their full holdings in the BlackRock Bitcoin ETF throughout the second quarter. Regulatory filings confirm that Mubadala Investment Company and the Abu Dhabi Investment Council held a combined 22.94 million shares of BlackRock’s iShares Bitcoin Trust ETF (IBIT) as of June 30, with neither fund reducing its share count during the period.

This decision to hold firm meant the funds absorbed a substantial paper loss as the value of IBIT declined. At the end of March, their joint holdings were valued at approximately $881.4 million. By maintaining the same number of shares, the total value dropped to around $764 million, erasing roughly $118 million during the second quarter. Mubadala’s stake saw its reported value decrease from $565.6 million to $490.1 million.

Detailed Sovereign Holdings

Mubadala’s filings show it possessed 14,721,917 IBIT shares on June 30, an amount identical to what it held three months prior. This position continues to be the second-largest reported holding within its $34.8 billion 13F portfolio, trailing only its stake in GlobalFoundries. The sovereign investor had previously increased its position by almost 16% in the first quarter, acquiring over 2 million additional shares while Bitcoin's price was weakening. This followed an earlier move where it had expanded its stake by about 46% in the last quarter of 2025.

Similarly, the Abu Dhabi Investment Council (ADIC) also stood pat, holding 8,218,712 IBIT shares valued at about $273.6 million as of June 30. For ADIC, IBIT represents its largest reported US-listed asset, comprising more than 33% of its roughly $715 million 13F portfolio. ADIC began disclosing this position directly earlier in the year; its subsidiary, Al Warda Investments, had previously reported the stake. The change in reporting entity did not affect the beneficial ownership of the shares.

Navigating a Bear Market

The unwavering positions of the Abu Dhabi funds are particularly notable when set against Bitcoin’s performance this year. On Friday, Bitcoin was trading near $62,900, which is a decrease of about 29% from its price of roughly $88,700 at the beginning of 2026. The cryptocurrency has also plummeted by approximately half from its record high of over $126,000, which was achieved last October.

This retreat is reflected in the performance of IBIT itself. According to BlackRock data, the ETF was down 27.6% for the year through August 13, and its net assets had declined to about $47.35 billion. Its shares concluded Thursday's trading session at $35.88. The trend extends across the wider market, with data from SoSoValue indicating that Bitcoin ETFs have experienced an asset outflow of around $40 billion, bringing total assets under management down from over $116.7 billion to approximately $95.5 billion.

A Contrasting Institutional Strategy

The Abu Dhabi investors have so far demonstrated a different response to the downturn compared to other institutions that have reduced their exposure. Harvard University, for instance, cut its IBIT position by 43% during the first quarter, a move that followed a previous reduction late last year. In that same timeframe, Mubadala was increasing its holdings, while ADIC maintained its stake without change.

Michael Tanguma, the chief executive of Onramp Bitcoin, speculated that Abu Dhabi might also be holding Bitcoin directly in cold storage. He argued that it would be unconventional for a sovereign investor with a long-term outlook to depend solely on an ETF structure. Form 13F disclosures, which cover specific US-listed securities, would not show any Bitcoin held directly in sovereign-controlled wallets, meaning Tanguma's assertion can be neither confirmed nor denied by the filings.

Abu Dhabi's Broader Digital Asset Ambitions

The funds’ decision to hold their Bitcoin positions aligns with Abu Dhabi's strategy to build a broader institutional presence across digital assets. This push encompasses regulation, venture capital, tokenization, and crypto infrastructure.

The emirate's international financial center, Abu Dhabi Global Market, has had a dedicated regulatory framework for virtual assets in place since 2018. Late last year, it announced that over 20 regulated firms were licensed to carry out activities related to virtual assets or fiat-referenced tokens. Under this framework, Binance was granted a global license in December, and just this week, Coinbase received regulatory approval to create an international tokenization hub in Abu Dhabi.

State-affiliated capital has followed this regulatory growth. Last year, Abu Dhabi-backed MGX made one of the largest institutional investments in a crypto company by agreeing to invest $2 billion in Binance. In a separate initiative, Hub71, Abu Dhabi's government-supported technology ecosystem, launched a dedicated digital-assets program with more than $2 billion in capital allocated to Web3 and blockchain startups.

Mubadala has also diversified its involvement beyond owning Bitcoin through an ETF. In July, its asset management division, Mubadala Capital, moved one of its private-market funds onchain, tokenizing the strategy and making it available on the Base, Solana, and Sui networks. These combined initiatives indicate an investment strategy from Abu Dhabi that increasingly views digital assets as a core component of its financial infrastructure, rather than purely as a speculative trade.