The Shift in Bitcoin ETF Ownership: A New Era for Investment Advisers
The landscape of Bitcoin exchange-traded funds (ETFs) is on the cusp of a significant transformation. According to CF Benchmarks, a U.K.-regulated index provider, investment advisers are poised to surpass hedge funds as the largest holders of U.S.-listed spot Bitcoin ETFs in 2025.
A Brief History of Bitcoin ETFs
In January, 11 spot Bitcoin ETFs debuted in the U.S., offering investors a convenient way to gain exposure to the cryptocurrency without the need for personal storage and management. Since their inception, these ETFs have attracted over $36 billion in investor funds, with hedge-fund managers dominating demand, holding 45.3% of the ETFs. Investment advisers, who manage retail and high-net-worth capital, trail behind with 28%.
A Changing Tide
However, CF Benchmarks predicts that investment advisers’ share will surge above 50% in both the Bitcoin and ether ETF markets next year. This shift is driven by growing client demand, a deeper understanding of digital assets, and product maturation. As the $88 trillion U.S. wealth management industry increasingly adopts these vehicles, investment advisers are set to play a more significant role in shaping the ownership mix.
Ether ETF Market: A Leader Emerges
Investment advisers are already leading the charge in the ether ETF market and are expected to extend their lead in 2025. Ethereum, the parent blockchain of ether, is poised to benefit from the growing popularity of asset tokenization, while Solana may continue to gain market share with potential regulatory clarity in the U.S.
Tokenization and Stablecoins: New Trends Emerge
The report predicts that the trend towards asset tokenization will accelerate in 2025, with tokenized real-world assets (RWAs) reaching $30 billion. In the stablecoin market, new entrants like 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%.
Blockchain Scalability and Regulatory Clarity
The scalability of blockchains will be put to the test in 2025, with the expected increase in active user adoption requiring on-chain capacity to double to over 1600 TPS. Regulatory clarity under the new administration may also play a crucial role in shaping the market.
Federal Reserve’s Dovish Turn
Finally, the Federal Reserve is expected to adopt a dovish stance, employing unconventional measures like yield curve control or expanded asset purchases to address the toxic mix of higher debt servicing costs and a weak labor market. This could lead to deeper debt monetization, elevating inflation expectations and bolstering hard assets like Bitcoin as hedges against monetary debasement.
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