Investment advisors will likely overtake hedge funds as the largest holders of U.S.-listed spot bitcoin (BTC) exchange-traded funds (ETFs) next year, CF Benchmarks said on Monday.
A total of 11 BTC spot ETFs debuted in the US on January 11, providing investors with a way to gain exposure to the cryptocurrency without having to personally hold and store it. Since their inception, they have accumulated more than $36 billion in investor funds.
Demand has been dominated by hedge fund managers, who own 45.3% of the ETFs. Investment advisors, the gatekeepers of retail and high-net-worth capital, come in a distant second at 28%.
That will change in 2025, according to CF Benchmarks, which predicts investment advisor participation will rise above 50% in the BTC and ether (ETH) ETF markets. CF Benchmarks is a UK-regulated index provider behind several key digital asset benchmarks, including the BRRNY, which is referenced by many ETFs.
“We expect investment advisor allocations to increase beyond 50% for both assets, as the $88 trillion US wealth management industry begins to adopt these vehicles, eclipsing the combined record net flows of $40 billion. 2024 dollars,” CF Benchmarks said in an annual report. shared with CoinDesk.
“This transformation, driven by growing client demand, a deeper understanding of digital assets and product maturation, will likely reshape the current property mix as these products become staples in model portfolios.” said the index provider.
Investment advisors are already in the top position in the ether ETF market and are likely to extend their lead next year.
Ether’s parent blockchain, Ethereum, is expected to benefit from the growing popularity of asset tokenization, while its rival Solana could continue to gain market share thanks to potential regulatory clarity in the US.
“We expect the trend towards asset tokenization to accelerate in 2025, with
Tokenized RWA exceeding $30 billion,” the report says, referring to real-world assets.
In 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 increased from 50% to 70%.
The scalability of blockchains will also be tested, and the expected increase in active user adoption due to regulatory clarity under President-elect Donald Trump’s administration may require on-chain capacity to double to over 1,600 TPS. .
Last but not least, the Federal Reserve is seen as turning dovish, employing unconventional measures such as yield curve control or expanded asset purchases to address the toxic combination of higher debt-servicing costs and a weak labor market.
“Deeper debt monetization should raise inflation expectations, boosting hard assets like Bitcoin as a hedge against monetary debasement,” the report says.
