Investment Advisors to Overtake Hedge Funds as Top Holders of Bitcoin (BTC) ETFs Next Year: CF Benchmarks
Investment advisers could overtake hedge funds as the biggest holders of US-listed spot bitcoin (BTC) exchange-traded funds (ETFs) next year, CF Benchmarks said on Monday.
A total of 11 spot BTC ETFs debuted in the US on January 11, providing a way for investors to gain exposure to the cryptocurrency without having to personally hold and store it. Since their inception, they have raised over $36 billion in investor funding.
Demand was led by hedge-fund managers, who owned 45.3% of ETFs. Investment advisors, the gatekeepers to retail and high-net-worth capital, are a distant second at 28%.
That is set to change by 2025, according to CF Benchmarks, which predicts that the share of investment advisors will increase to more than 50% in both the BTC and ether (ETH) ETF markets. CF Benchmarks is a UK-regulated index provider behind several major digital asset benchmarks, including BRRNY, which is referenced by many ETFs.
“We expect investment advisor allocations to increase more than 50% for both assets, as the $88 trillion US wealth management industry begins to embrace these vehicles, surpassing the combined record-breaking $40 billion in net flows by 2024,” CF Benchmarks said in an annual report shared with CoinDesk.
“This change, driven by growing client demand, deeper understanding of digital assets, and product maturation, will likely reshape the current ownership mix as these products become staple in model portfolios,” the index provider said.
Investment advisers are already in pole position in the ether ETF market and are likely to extend their lead in the next year.
Ether’s parent blockchain, Ethereum, is expected to benefit from the growing popularity of asset tokenization while rival Solana may continue to gain market share with potential regulatory clarity in the US
“We expect the trend towards asset tokenization to accelerate in 2025, with
tokenized RWAs topping $30B,” the report said, referring to real-world assets.
Among stablecoins, new entrants such as Ripple’s RLUSD and Paxos’ USDG are expected to challenge the dominance of tether’s USDT, whose market share has risen from 50% to 70%.
The scalability of blockchains will also be examined, and the expected increase in active user adoption due to regulatory clarity under the administration of President-elect Donald Trump may require on-chain capacity to double to over 1600 TPS.
Last but not least, the Federal Reserve is seen as becoming dovish, using unconventional measures such as yield curve control or expanded asset purchases to address the toxic mix of higher debt servicing costs. and a weak labor market.
“Deeper debt monetization should raise inflation expectations, boosting hard assets like Bitcoin as hedges against monetary debasement,” the report said.
