By 2025, crypto exchange-traded funds (ETFs) are projected to comprise 5% of hedge fund and pension fund portfolios, according to Fiorenzo Manganiello, a prominent blockchain expert.
Manganiello, the co-founder and managing partner of LIAN Group, made this prediction following reports that BlackRock’s spot bitcoin 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 (SEC) this summer.
Manganiello believes that regulatory approvals will encourage institutional investors to enter the crypto 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, it’s a big step,” Manganiello said. “Crypto is beginning to prove the critics wrong; it’s been given regulatory legitimacy.”
He noted that the rapid growth of BlackRock’s spot bitcoin ETF is a significant indicator. “I won’t deny that crypto has traditionally been seen as a retail market. But, with BlackRock stepping in and growing its own spot ETF so quickly, it won’t be long until other institutions take the leap and invest in crypto. The Ether ETF approval will only be a catalyst.”
Profitability
Manganiello emphasized the profitability of crypto and the need for institutional investors to diversify their assets.
“Crypto can be highly profitable – and institutional investors will definitely look to take advantage of it as they look to diversify their assets. That’s why I think by the end of next year we’ll see crypto ETFs form a decent chunk, and at least 5%, of hedge fund and pension fund portfolios.”
He also highlighted the importance of adaptability for institutional investors.
“At the end of the day, it’s incredibly important for institutional investors to stay ahead of the curve. They have to adopt what I’d call a ‘millennial savviness,’ an approach that embraces emerging, innovative alternative investments – and isn’t bogged down with preserving the status quo.”
Institutional investors such as hedge funds and pension funds need to be prepared to consider crypto as an asset, especially with the rapid approval of crypto ETFs. As regulatory bodies continue to approve crypto ETFs, the financial landscape is poised for significant changes, with cryptocurrencies becoming a staple in institutional investment portfolios.
LIAN Group, an investment firm that supports companies across various industries, including digital infrastructure, AI, cryptocurrency, and blockchain, has invested over $500 million since its inception. One of its notable ventures is Cowa, the largest European blockchain infrastructure company powered by renewable energy.