A trillion-dollar future for crypto ETPs is being projected by Bitwise CIO Matt Hougan, as institutional involvement increases and allocation levels continue to grow.
It was stated by Bitwise Chief Investment Officer Matt Hougan on May 14 that a significant breakthrough is taking place throughout the financial advisory sector concerning crypto investments.
Following his participation in a prominent advisory firm’s conference, expectations were shared by Hougan that access to crypto exchange-traded products (ETPs) will be enabled by most major firms by the close of 2025.
It was further noted by him that demand for crypto exposure is growing stronger, with projections indicating that inflows into crypto ETPs will soon be measured in “many billions.”
According to data from Farside Investors, daily inflows for U.S.-listed crypto ETPs have exceeded $1 billion on five occasions, more than a year after their introduction.
It was also stated by Hougan that portfolio allocation standards for crypto are evolving, with “5% being regarded as the new 1%.” He elaborated that greater comfort with increased crypto allocations in conventional portfolios is being observed among institutions.
Institutional Crypto Allocations Undergo Shift
Modest crypto allocations have traditionally been recommended by asset managers, with volatility and concentrated risk often cited as justification. In December, a 1% to 2% allocation to Bitcoin was defined as a “reasonable range” for multi-asset portfolios by BlackRock’s Investment Institute.
That guidance has subsequently been put into effect. Bitcoin (BTC) was included by BlackRock in its $150 billion model portfolio offerings through the iShares Bitcoin Trust (IBIT), with a target allocation weight set between 1% and 2%.
The introduction of U.S. spot Bitcoin and Ethereum (ETH) ETPs in 2024 was seen as a scalable, regulation-compliant method of gaining exposure for institutional clients, leading numerous advisors to reassess their stance on crypto investments.
An uptick in advisor interest regarding Ethereum was also reported by Hougan, who noted that more questions about the asset were received by him “in the past few days than over the previous six months.”
Growing Interest Seen in Both Bitcoin and Ethereum
According to Hougan, although Bitcoin continues to be the leading product in terms of scale, Ethereum has been identified as a major point of interest among professionals.
In April, it was reported by Bitwise that as of December 2024, U.S. spot Bitcoin ETPs held $93.2 billion in assets under management (AUM), while spot Ethereum ETPs accounted for $6.3 billion in AUM.
Despite the gap, ownership of both investment products has been distributed among major institutional categories.
In Bitcoin ETPs, the majority of institutional ownership has been attributed to hedge funds (36.97%) and investment advisors (33.11%).
In Ethereum ETPs, a more evenly distributed exposure has been observed among investment advisors (29.79%), brokerages (25.25%), and hedge funds (24.74%), while a greater inclination toward Ethereum has been demonstrated by family offices.
Ethereum was allocated 5.8% and 4.5% of the total crypto holdings by investment advisors and hedge funds, respectively, while family offices directed 25% of their nearly $173 million crypto portfolio toward Ethereum.
Industry expectations that professional investment access to crypto is progressing into a more mature phase have been reinforced by Hougan’s comments. With broader product availability and rising allocation standards, a more standardized role for crypto in portfolio construction is likely to be assumed.
