Investment Advisors Will Overtake Hedge Funds as Largest Holders of Bitcoin (BTC) ETFs Next Year: CF Benchmarks

Investment advisers will likely overtake hedge funds as the largest holders of U.S.-listed bitcoin exchange-traded funds (ETFs) next year, CF Benchmarks reported Monday.

A total of 11 Bitcoin (BTC) exchange-traded funds debuted in the United States on January 11, providing a way for investors to gain exposure to the cryptocurrency without personally having to hold and store it. Since its inception, it has raised more than $36 billion in investor money.

Demand was dominated by hedge fund managers, who own 45.3% of ETFs. Investment advisors, the gatekeepers to retail and high-net-worth capital, come in a distant second at 28%.

This is set to change in 2025, according to CF Benchmarks, which expects investment advisors’ share to rise to more than 50% in both the Bitcoin and Ethereum (ETH) ETF markets. CF Benchmarks is a UK-regulated index provider that is behind several major digital asset benchmarks, including BRRNY, which many ETFs reference.

“We expect investment adviser allocations to rise to more than 50% to both assets, as the $88 trillion U.S. wealth management industry begins to embrace these instruments, surpassing record combined net net inflows of $40 billion in 2024,” CF Benchmarks said in an annual report. “. Shared with CoinDesk.

“This shift, driven by increasing client demand, deeper understanding of digital assets, and product maturity, is likely to reshape the current ownership mix as these products become core components of typical portfolios,” the index provider said.

Investment advisors already hold a leading position in the Ethereum ETF market and are likely to expand their lead in the coming year.

Ethereum’s parent blockchain, Ethereum, is expected to benefit from the rising popularity of asset tokenization, while rival Solana could continue to gain market share due to potential regulatory clarity in the US.

“We expect the trend towards asset tokenization to accelerate in 2025, with…
The report said, referring to token RWAs exceeding $30 billion Real world origins.

In stablecoins, new entrants such as Ripple’s RLUSD and Paxos’ USDG are expected to challenge the dominance of Tether’s USDT, which has increased its market share from 50% to 70%.

The scalability of the blockchain will also be tested, and an expected increase in active user adoption due to regulatory clarity under the administration of President-elect Donald Trump may require a doubling of on-chain capacity to more than 1,600 TPS.

Last but not least, the Fed is expected to turn dovish, using unconventional measures such as yield curve control or expanding asset purchases to address the toxic mix of rising debt servicing costs and a weak labor market.

“Deeper debt monetization would raise inflation expectations, strengthening hard assets like Bitcoin as hedges against monetary deterioration,” the report said.