CF Benchmarks Predicts Shift: Investment Advisers to Dominate BTC ETF Holdings Over Hedge Funds in 2025

Investment Advisers Expected to Dominate BTC and ETH ETFs by 2025, Surpassing Hedge Funds: CF Benchmarks

Investment advisers, key intermediaries for retail and high-net-worth investors, are projected to surpass 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 recent report from CF Benchmarks.

Since the launch of 11 spot Bitcoin ETFs in the U.S. on January 11, these products have collectively amassed over $36 billion in assets, providing investors with exposure to cryptocurrencies without the complexities of direct ownership. Hedge funds currently dominate holdings with a 45.3% share, while investment advisers account for 28%.

CF Benchmarks forecasts a major shift in ownership patterns next year, with investment advisers expected to control over 50% of both BTC and ETH ETF markets. This growth will be fueled by rising client demand, increased familiarity with digital assets, and the maturation of ETF products.

“We foresee investment adviser allocations surpassing 50% for both Bitcoin and Ethereum ETFs as the $88 trillion U.S. wealth management sector increasingly adopts these vehicles, outpacing 2024’s record $40 billion in net inflows,” CF Benchmarks stated in its annual report shared with CoinDesk.

These ETFs are becoming integral to diversified investment portfolios, driving a transformation in ownership structures and cementing their role in traditional financial markets.

Investment advisers already lead the Ethereum ETF market and are expected to solidify their dominance in 2025. Ethereum’s blockchain is set to benefit significantly from the increasing adoption of asset tokenization, while rivals like Solana may see greater market traction amid improving regulatory clarity.

“We expect asset tokenization to accelerate in 2025, with tokenized real-world assets (RWAs) exceeding $30 billion in total market value,” the report noted.

In the stablecoin sector, emerging players like Ripple’s RLUSD and Paxos’ USDG are anticipated to challenge Tether’s USDT, which currently commands 70% of the market share, up from 50%.

Blockchain scalability will also face critical tests as regulatory clarity under President-elect Donald Trump’s administration drives higher adoption rates. On-chain capacity may need to double to support more than 1,600 transactions per second (TPS).

Additionally, the Federal Reserve is expected to adopt a dovish monetary stance, potentially employing strategies such as yield curve control and expanded asset purchases to address rising debt servicing costs and labor market challenges.

“Increased debt monetization is likely to elevate inflation expectations, enhancing Bitcoin’s status as a reliable hedge against monetary debasement,” CF Benchmarks concluded.