According to fresh insights from Bloomberg Intelligence, investment advisors represent the largest identifiable group, excluding individual retail investors, actively purchasing Bitcoin and Ether exchange-traded funds (ETFs).
James Seyffart, a Bloomberg ETF analyst, revealed in a Wednesday post on X that investment advisors are “the primary holders” of Ether ETFs, with investments exceeding $1.3 billion, equivalent to 539,000 Ether (ETH), during the second quarter. This figure marks a substantial 68% increase from the previous quarter.
A similar trend is evident in the US spot Bitcoin ETF market. Seyffart noted on Monday that “advisors are by far the leading holders now,” controlling over $17 billion worth of Bitcoin (BTC), amounting to 161,000 BTC.
In both Bitcoin and Ether ETFs, investment advisors’ exposure is almost double that of hedge fund managers.
However, Seyffart clarified that this data is based on SEC filings, which capture only a portion of the total spot Bitcoin ETF ownership.
“This information primarily comes from 13F filings, representing around 25% of the Bitcoin ETF shares. The remaining 75% are held by non-filers, largely comprised of retail investors,” he explained.
Crypto ETF Data: What Experts Are Saying
Vincent Liu, Chief Investment Officer at Kronos Research, believes the data indicates a shift from speculative trading to long-term, portfolio-driven allocations.
“Their strategic positions, as the top holders, provide improved liquidity and a robust base for cryptocurrency integration into global markets,” he stated in an interview with Cointelegraph.
Liu anticipates that wider adoption of Bitcoin and Ether ETFs by investment advisors will lead to crypto being recommended as a viable long-term diversification tool alongside traditional assets like stocks, bonds, and other mainstream investments.
“As more alternative cryptocurrencies enter the ETF space and yield-generating assets such as staked Ether gain approval, advisors can utilize crypto not only for portfolio diversification but also to generate returns, thus boosting wider and more sustained adoption.”
Significant Growth Potential for Advisors in Crypto ETFs
Speculation abounds that the number of financial advisors participating in crypto ETFs could surge as regulations become clearer. Fox News Business projected in July that financial advisors could potentially channel trillions of dollars into the market.
Pav Hundal, the lead market analyst at Australian crypto brokerage Swyftx, informed Cointelegraph that investment advisor holdings in Bitcoin ETFs have increased by approximately 70% since June. He attributes this growth to a more favorable regulatory environment in the US combined with strong demand for risk-on assets.
“We are probably only at the beginning of this expansion. As with any investment gaining momentum, you see two types of investors: early adopters and those who join later, driven by a fear of missing out,” he said.
“This dynamic affects both institutions and retail investors. With Ethereum approaching new record highs and US policymakers suggesting a potentially more flexible monetary policy amid signs of a softening labor market, conditions are favorable for advisors to increase their crypto ETF holdings.”
The Role of Regulation in Crypto ETF Expansion
Kadan Stadelmann, Chief Technology Officer at Komodo Platform, a blockchain technology provider, shared with Cointelegraph that the data demonstrates “Main Street, through their financial advisors, is looking to access cryptocurrency markets via Wall Street.”
“Ether ETFs are replicating the success of Bitcoin ETFs but on a smaller scale, signifying a transition from initial adoption to institutional acceptance. Furthermore, this involves not only smaller Wall Street firms but also major players like BlackRock and Fidelity,” he added.
However, Stadelmann believes that “regulatory developments” will significantly influence the long-term involvement of financial advisors in the crypto market.
The US Securities and Exchange Commission (SEC) introduced Project Crypto in July to promote blockchain innovation, while the US House of Representatives passed the GENIUS Act, which was subsequently signed into law by then US President Donald Trump, providing regulatory clarity that crypto lobbyists had long advocated for.
“In lower Manhattan, crypto is now viewed more as an equity than a disruptive revolution, and this movement by major players has been echoed by financial advisors, who are now reassured by the clarity of the regulatory framework,” Stadelmann explained.
Stadelmann also cautioned that a less crypto-friendly administration elected in the future could potentially disrupt this progress.
“A hostile approach to crypto could include restrictive measures, which might freeze the institutional crypto market and instill fear in financial advisors, potentially leading to the revocation of their licenses if they offer these products,” he stated.
“The future remains uncertain, but Democrats might choose to maintain the current status quo given the market’s demands.”