According to recent data from Bloomberg Intelligence, investment advisers are the largest identifiable group outside of retail acquiring Bitcoin and Ether exchange-traded funds.
James Seyffart, a Bloomberg ETF analyst, stated in an X post on Wednesday that investment advisers are “dominating the known holders” of Ether ETFs, having invested over $1.3 billion or 539,000 Ether (ETH) in Q2 — a 68% increase compared to the previous quarter.
A similar trend was observed in US spot Bitcoin ETFs. On Monday, Seyffart mentioned that “advisers are by far the biggest holders now,” with over $17 billion of exposure in 161,000 Bitcoin (BTC).
In both cases, the exposure from investment advisers was almost twice that of hedge fund managers.
However, Seyffart noted that this data is based on filings with the SEC, which only represents a small fraction of all spot Bitcoin ETF holders.
“This data is primarily 13F data, accounting for about 25% of the Bitcoin ETF shares. The remaining 75% are owned by non-filers, which largely comprises retail,” he added.
Crypto ETF data tells a story, analysts say
Vincent Liu, chief investment officer at Kronos Research, indicated that the data highlights a transition from speculative investments to long-term, portfolio-based allocations.
“As the primary holders, their strategic positioning creates deeper liquidity and a stable foundation for crypto’s integration into global markets,” he remarked to Cointelegraph.
Liu suggested that as more advisers embrace Bitcoin and Ether ETFs, crypto will increasingly be recognized as a long-term diversification tool within traditional portfolios, supplementing equities, bonds, and other mainstream assets.
“As more altcoins enter the ETF space and yield-bearing assets like staked Ether receive approval, advisers can utilize crypto not only for diversification but also for generating returns, fostering broader and more prolonged adoption.”
Room for advisers to lean further into crypto ETFs
Some have speculated that the number of financial advisers investing in crypto ETFs could surge as regulations are implemented. In July, Fox News Business forecasted that trillions of dollars could enter the market via financial advisers.
Pav Hundal, lead market analyst at Australian crypto broker Swyftx, shared with Cointelegraph that investment adviser holdings in Bitcoin ETFs have surged by approximately 70% since June, fueled by a softening in the US regulatory landscape coupled with unprecedented demand for risk-on assets.
“We are likely still in the early stages of growth. With any investment that starts gaining momentum, there are two types of participants: those who come early and those who join later out of fear of missing out,” he stated.
“That dynamic occurs among both institutional and retail investors. With Ethereum reaching new all-time highs and US policymakers indicating a softer monetary approach as the labor market displays signs of stress, the conditions are ripe for advisers to delve deeper.”
Regulation to play a role in crypto ETF growth
In the meantime, Kadan Stadelmann, chief technology officer at the blockchain-based Komodo Platform, conveyed to Cointelegraph that the data clearly indicates “Main Street, via their financial advisers, is seeking access to crypto markets through Wall Street.”
“Ether ETFs are mimicking the success of Bitcoin ETFs, yet on a smaller scale, signaling a shift from early to institutional adoption. This involves not merely smaller Wall Street firms, but the largest entities, including BlackRock and Fidelity,” he added.
However, Stadelmann believes that “regulatory realities” will influence the future growth of financial advisers in the crypto market.
The US Securities and Exchange Commission initiated Project Crypto in July to promote blockchain innovation, and the US House passed the Genius Act that same month, promising regulatory clarity long sought by crypto advocates.
“In lower Manhattan, crypto is increasingly perceived as an equity rather than a revolution, and the actions of these major players have been mirrored by financial advisers, who now feel emboldened by regulatory clarity,” Stadelmann stated.
Related: Altseason won’t start until more crypto ETFs launch: Bitfinex
Nonetheless, Stadelmann warned that if a less crypto-friendly administration were to be elected in the next election, it could disrupt progress.
“A shift toward regulatory crackdowns could freeze the institutional crypto market and instill fear in financial advisers regarding potential license losses if they offer such products,” he cautioned.
“This remains to be seen, with Democrats possibly maintaining the new status quo to meet market demands.”
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