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CoinDesk 2024-12-23 14:46:46

Investment Advisers to Supplant Hedge Funds as Top BTC ETF Holders in 2025: CF Benchmarks

Investment advisers will probably overtake hedge funds as the biggest holders of U.S.-listed spot bitcoin (BTC) exchange-traded funds (ETFs) next year, CF Benchmarks said Monday. A total of 11 spot BTC ETFs debuted in the U.S. on Jan. 11, providing a way for investors to gain exposure to the cryptocurrency without personally having to hold and store it. Since their inception, they have accumulated over $36 billion in investor funds. Demand has been dominated by hedge-fund managers, who own 45.3% of the ETFs. Investment advisers, the gatekeepers to retail and high-net-worth capital, are a distant second at 28%. That's set to change in 2025, according to CF Benchmarks, which predicts investment advisers' share will rise above 50% in both the BTC and ether (ETH) ETF markets. CF Benchmarks is a U.K.-regulated index provider behind several key digital asset benchmarks, including the BRRNY, referred by many ETFs. "We expect Investment advisor allocations to rise beyond 50% for both assets, as the $88 trillion U.S. wealth management industry begins to embrace these vehicles, eclipsing 2024's combined record-breaking $40 billion in net flows," CF Benchmarks' said in an annual report shared with CoinDesk. "This transformation, driven by growing client demand, deeper understanding of digital assets, and product maturation, will likely reshape the current ownership mix as these products become staples 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 next year. Ether's parent blockchain, Ethereum, is expected to benefit from the growing popularity of asset tokenization while rival Solana could continue to gain market share on potential regulatory clarity in the U.S. "We expect the trend towards asset tokenization to accelerate in 2025, withtokenized RWAs topping $30B," the report said, referring to real-world assets . In stablecoins, 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%. 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 1600 TPS. Last but not least, the Federal Reserve is seen turning dovish, 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. "Deeper debt monetization should elevate inflation expectations, bolstering hard assets like Bitcoin as hedges against monetary debasement," the report said.

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