Investment Advisers Poised to Surpass Hedge Funds as Top Holders of BTC and ETH ETFs by 2025: CF Benchmarks
Investment advisers, who act as key facilitators of retail and high-net-worth investments, are expected to overtake hedge fund managers as the largest holders of U.S.-listed spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) by 2025, according to a report from CF Benchmarks.
Since the debut of 11 spot Bitcoin ETFs in the U.S. on January 11, these investment products have attracted over $36 billion in assets under management, offering investors exposure to cryptocurrencies without the complexities of direct ownership and storage. So far, hedge funds have dominated the space, accounting for 45.3% of holdings, while investment advisers trail at 28%.
CF Benchmarks predicts a significant shift in this dynamic next year, with investment advisers expected to surpass the 50% ownership mark in both BTC and ETH ETFs. This shift will be driven by increasing client demand, a deeper understanding of digital assets, and growing confidence in these investment vehicles as they mature.
“We anticipate investment adviser allocations will exceed 50% for both assets as the $88 trillion U.S. wealth management industry increasingly adopts these ETFs, surpassing this year’s record-breaking $40 billion in net inflows,” CF Benchmarks stated in its annual report shared with CoinDesk.
The report highlights how these ETFs are evolving into core components of diversified portfolios, reshaping ownership patterns and solidifying their place in traditional financial frameworks.
In the Ethereum ETF market, investment advisers are already in the lead and are expected to extend their dominance in 2025. Ethereum’s blockchain is also positioned to benefit from the growing adoption of asset tokenization, while competitors like Solana may gain additional market traction as regulatory clarity improves.
“We expect the asset tokenization trend to accelerate in 2025, with tokenized real-world assets (RWAs) surpassing $30 billion in market value,” the report noted.
In the stablecoin sector, new players like Ripple’s RLUSD and Paxos’ USDG are projected to challenge Tether’s USDT, which currently holds a commanding 70% market share, up from 50%.
The report also anticipates blockchain scalability to face significant tests as regulatory clarity under the incoming administration of President-elect Donald Trump drives increased adoption. On-chain capacity may need to double to handle over 1,600 transactions per second (TPS).
Lastly, the Federal Reserve is expected to adopt a more dovish stance, possibly deploying unconventional strategies such as yield curve control or expanded asset purchase programs to counter rising debt servicing costs and labor market weaknesses.
“Greater debt monetization is likely to raise inflation expectations, reinforcing Bitcoin’s appeal as a hedge against monetary debasement,” CF Benchmarks concluded.
