Investment advisors are expected to overtake hedge funds as the largest holders of U.S.-listed spot Bitcoin (BTC) exchange-traded funds (ETFs) by 2025, according to a new report by CF Benchmarks.
The report, published today, predicts that investment advisors will control more than 50% of the Bitcoin (BTC) and Ethereum (ETH) ETF markets, signaling a shift in the makeup of ETF holders.
Since the launch of 11 spot BTC ETFs in the U.S. on Jan. 11, investors have put more than $36 billion into these funds, providing an easy way for individuals to gain exposure to Bitcoin without having to hold or store the asset directly. Hedge fund managers lead the way with 45.3% of the ETFs, while investment advisors who manage capital for individuals and high-net-worth individuals own 28%.
CF Benchmarks, a UK-regulated index provider behind several major digital asset benchmarks, predicts that investment advisors will lead the $88 trillion US wealth management industry in embracing Bitcoin and ETH ETFs in 2025. This trend is expected to be driven by increased demand from clients, a better understanding of digital assets, and the maturation of crypto products. The firm also predicts that combined net flows into BTC and ETH ETFs will exceed $40 billion, a year-on-year record.
“Investment advisor allocations will rise above 50% for both assets, reshaping the ownership mix of these ETFs,” CF Benchmarks said in its annual report. “As these products become staples in model portfolios, they will likely reshape the market for digital assets.”
In addition to Bitcoin, investment advisors are already the dominant force in the ETH ETF market and are expected to further strengthen their position in 2025. The growth in asset tokenization is expected to continue, with tokenized real-world assets (RWA) expected to exceed $30 billion, further supporting the demand for digital asset investment vehicles.
CF Benchmarks also notes that new stablecoins 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%.
Going forward, the report predicts that the scalability of the blockchain will be tested and that active user adoption will require increasing on-chain capacity beyond 1,600 transactions per second (TPS) due to regulatory clarity under President-elect Donald Trump’s administration.
*This is not investment advice.