ETFs
Crypto ETFs to Make Up 5% of Hedge Funds by 2025
By 2025, cryptocurrency exchange-traded funds (AND F) are expected to represent 5% of hedge fund and pension fund portfolios, according to Fiorenzo Manganiello, a leading blockchain expert.
Manganiello, co-founder and managing partner of LIAN Group, made the prediction following reports that BlackRock’s Bitcoin spot ETF has accumulated $16.7 billion in assets since its launch in January 2024. Additionally, the Ether ETF is expected to receive final approval from the U.S. Securities and Exchange Commission (SECOND) this summer.
Manganiello believes that regulatory approvals will encourage institutional investors to enter the cryptocurrency market. Traditionally dominated by retail investors, the market is now seen as a viable asset class for hedge funds and pension funds.
“Crypto ETFs have been given the regulatory green light, and for an asset that has long been considered volatile and novel, this is a big step,” Manganiello said. “Cryptocurrencies are starting to prove the critics wrong; they have been given regulatory legitimacy.”
He noted that the rapid growth of BlackRock’s bitcoin spot ETF is a significant indicator. “I won’t deny that cryptocurrency has traditionally been considered a retail market. But, with BlackRock stepping in and rapidly growing its own spot ETF, it won’t be long before other institutions take the plunge and invest in cryptocurrency. The approval of the Ether ETF will just be a catalyst.”
Profitability
Manganiello stressed the crypto profitability and the need for institutional investors to diversify their assets.
“Cryptocurrencies can be very profitable, and institutional investors will certainly look to leverage them to diversify their assets. That’s why I think that by the end of next year, we will see crypto ETFs making up a significant portion, and at least 5%, of hedge fund and pension fund portfolios.”
He also stressed the importance of adaptability for institutional investors.
“Ultimately, it is extremely important for institutional investors to stay ahead of the curve. They need to adopt what I would call ‘millennial knowledge’, an approach that embraces emerging and innovative alternative investments, and is not limited to preserving the status quo.”
Institutional investors such as hedge funds and pension funds should be prepared to consider cryptocurrencies as an asset, especially with the rapid approval of crypto ETFs. As regulators continue to approve crypto ETFs, the financial landscape is poised for significant change, with cryptocurrencies becoming a staple of institutional investment portfolios.
LIAN Group, an investment firm that backs companies across various sectors including digital infrastructure, AI, cryptocurrencies, and blockchain, has invested over $500 million since its inception. One of its notable companies is Cowa, Europe’s largest blockchain infrastructure company powered by renewable energy.