Key insights
In 2025, oil-related capital from the Gulf, including sovereign wealth funds, family offices, and private banking networks, became a key factor in influencing Bitcoin’s liquidity dynamics.
These investors primarily engage with Bitcoin through regulated pathways, such as spot ETFs.
Abu Dhabi has emerged as a central hub for this trend, bolstered by substantial sovereign-linked capital and the Abu Dhabi Global Market, which offers a regulated environment for global asset managers and crypto market intermediaries.
Investors rich in oil cite diversification, long-term portfolio strategies, generational demand within private wealth, and chances to develop supporting financial infrastructure as major motivators for their interest.
Since Bitcoin (BTC) experienced its initial sustained surge in 2013, numerous major spikes have stemmed from highly leveraged retail trading on less-regulated platforms. Following the launch of the ProShares Bitcoin Strategy ETF (BITO) on Oct. 19, 2021, institutional investors began to show heightened interest in Bitcoin.
By 2025, oil-linked funds from the Gulf region started playing a larger role in shaping Bitcoin’s market structure. This influx consists of sovereign wealth funds, state-affiliated investment firms, family offices, and the private banking networks serving them.
These funds are entering the market mainly through regulated mediums, especially spot Bitcoin exchange-traded funds (ETFs). Such inflows may instigate the next liquidity wave, potentially leading to narrower bid-ask spreads, heightened market depth, and the capacity for executing larger trades with minimal price impact.
This article discusses how oil-linked investors might affect crypto market liquidity, what the forthcoming liquidity wave may entail, and the reasons behind these funds’ interest in Bitcoin. It also underscores Abu Dhabi’s role as a regulated hub and the practical boundaries of liquidity.
Understanding oil-linked investors and their impact on market liquidity
The term “oil-rich investors” encompasses a network of capital managers whose resources are intrinsically or extrinsically linked to hydrocarbon revenues:
Sovereign wealth funds and government-related entities in the Gulf, overseeing significant asset bases and often influencing regional investment trends
Ultra-high-net-worth individuals and family offices, capable of acting quickly compared to sovereign funds, typically channeling demand via private banks and wealth advisers
International hedge funds and asset managers setting up operations in Abu Dhabi and Dubai, attracted partly by the proximity to regional capital.
For liquidity, what matters is not only the size of these allocations, but also their deployment. Many positions are funneled through vehicles and platforms tailored for institutional participation, fostering a more resilient market structure.
Did you know? Spot Bitcoin ETFs hold Bitcoin in custody rather than futures contracts. As such, net inflows typically necessitate BTC purchases in the spot market, linking investor demand directly to spot liquidity rather than derivatives exposure.
Understanding the next liquidity wave
From a market structure angle, a liquidity wave is commonly characterized by:
More substantial, consistent daily flows into regulated products rather than fleeting spikes
Deeper order books and tighter spreads in spot markets
Increased primary-market ETF activities, including share creations and redemptions, typically involving professional hedging
Robust, resilient derivatives markets, including futures and options, backed by regulated venues and clearing services.
A crucial distinction from earlier cycles is the development of market infrastructure. Spot Bitcoin ETFs provide a familiar, regulated vehicle for traditional investors. Meanwhile, prime brokerage services, institutional custody, and regulated trading hubs have alleviated operational friction for large-scale allocations.
Did you know? Authorized participants, not ETF issuers, typically manage Bitcoin transactions linked to ETF flows. These large financial entities create and redeem ETF shares while hedging across spot and derivatives markets, impacting liquidity dynamics behind the scenes.
Abu Dhabi’s conservative capital flows
Spot Bitcoin ETFs have provided a straightforward avenue for this class of capital. The structure and risk profile associated with crypto ETFs, like BlackRock’s iShares Bitcoin Trust (IBIT), diverge from traditionally registered funds. These differences are significant for investors focused on governance and compliance.
In the third quarter of 2025, the Abu Dhabi Investment Council enhanced its Bitcoin exposure by increasing its stake in IBIT. A regulatory filing indicates that the fund raised its holdings from around 2.4 million shares to nearly 8 million by Sept. 30, with the position valued at approximately $518 million by quarter-end based on the closing price.
Such numbers suggest that capital from the Gulf is gaining Bitcoin exposure via US-regulated listings. Even through a straightforward ETF purchase, these inflows can bolster liquidity since market makers and authorized participants may hedge exposure across spot and derivatives markets as flows shift.
Reasons Abu Dhabi’s oil-linked capital is drawn to Bitcoin
Various interconnected reasons drive oil-rich investors to Bitcoin:
Diversification and long-term investment strategy: Gulf investors, particularly those associated with sovereign entities, often seek long-duration themes, diversification, and global prospects. Some institutions consider Bitcoin as a long-term store of value, akin to gold in multi-asset portfolios, even though Bitcoin’s risk profile and volatility are distinctly different.
Generational changes in private wealth: Some wealth managers in the UAE report increasing client interest in regulated digital asset exposure, especially among younger high-net-worth investors. This trend has compelled traditional platforms to expand access through regulated offerings.
Developing supporting infrastructure: Beyond direct allocations, certain regions are investing in crypto market infrastructure, including regulated exchanges, custody solutions, and derivatives platforms. These systems can reduce operational challenges for institutional participation and may enhance more lasting liquidity over time.
Did you know? Numerous spot Bitcoin ETFs utilize various custodians and insurance layers, aligning with institutional risk management standards and providing reassurance for conservative investors who prefer not to manage private keys.
The role of the UAE as a regulated hub
Liquidity tends to concentrate in environments where regulation, licensing, and institutional counterparties are dependable. The UAE has established a layered framework that combines federal oversight with specialized financial free zones, like the Abu Dhabi Global Market (ADGM).
Several developments have reinforced ADGM’s status as an institutional base. Notably, Binance secured regulatory authorization under the ADGM framework.
A Reuters report indicates that ADGM has witnessed swift growth in assets under management, which the report attributes to its proximity to Abu Dhabi’s sovereign capital pools. When market makers, prime brokers, hedge funds, and wealth platforms cluster in one jurisdiction, it can lead to sustained two-way flows, stronger hedging activities, and tighter pricing.
How oil-linked capital enhances Bitcoin liquidity
Inflows from sovereign wealth funds associated with the oil economy can add an extra layer of institutional demand within the Bitcoin market, thereby supporting liquidity and market depth.
The ETF flywheel: Institutional investments via spot ETFs can initiate share creations, hedging activities, and related trades by professional intermediaries, potentially boosting turnover and narrowing spreads, especially with steady inflows.
Significant over-the-counter trades and prime brokerage: Major investors often favor block trades and financing solutions to minimize market impact. This can motivate intermediaries to invest capital and enhance execution services.
Regulated derivatives and clearing: A more advanced, regulated derivatives ecosystem can bolster price discovery and risk transfer while also assisting market makers in managing risk more effectively, which may lead to tighter quotes in the spot market.
Did you know? Spot Bitcoin ETFs trade during stock market hours, while Bitcoin is accessible 24/7. This discrepancy may result in price gaps at the stock market’s opening, especially after significant overnight movements or weekend volatility within crypto markets.
Institutional withdrawals and liquidity constraints
Institutional involvement does not eliminate downside risk. Bitcoin remains highly volatile, and even popular products may experience sudden outflows.
For instance, Reuters reported that BlackRock’s iShares Bitcoin Trust (IBIT) faced a record single-day net outflow of approximately $523 million on Nov. 18, 2025, amid a broader crypto market downturn. The report cited reasons including profit-taking, diminishing momentum, and a shift towards gold.
Access availability does not guarantee sustained allocation. Liquidity can flow both ways, meaning the same infrastructure that supports significant inflows can also facilitate rapid withdrawals.
Governments equally influence the regulatory landscape. Changes in policy and oversight can broaden or limit how funds access Bitcoin-linked products and, in certain instances, Bitcoin itself.
