Exchange-traded funds (ETFs) are expected to make up 5% of hedge fund and pension fund portfolios by 2025, according to Fiorenzo Manganiello, a leading blockchain expert.
Manganiello, co-founder and managing partner of LIAN Group, made the prediction after reports that BlackRock’s Bitcoin exchange-traded fund has raised $16.7 billion in assets since its launch in January 2024. Additionally, the ether fund 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 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 gotten the regulatory green light, and for an asset that has long been considered volatile and new, that’s a big step,” Manganiello said. “Crypto is starting to prove critics wrong; it’s getting regulatory legitimacy.”
He pointed out that the rapid growth of BlackRock’s Bitcoin spot ETF is an important indicator. “I won’t deny that crypto has traditionally been considered a retail market,” he said. “But with BlackRock stepping in and their spot ETF growing so rapidly, it won’t be long before other institutions step in and invest in crypto. The approval of the Ether ETF will only serve as a catalyst.”
Profitability
Manganiello stressed the profitability of cryptocurrencies and the need for institutional investors to diversify their assets.
“Cryptocurrencies can be very profitable – and institutional investors will certainly look to take advantage of them as they look to diversify their assets. That’s why I think by the end of next year we’ll see crypto ETFs making up a decent chunk, at least 5%, of hedge fund and pension fund portfolios.”
He also stressed the importance of adaptability for institutional investors.
“Ultimately, it is vital for institutional investors to stay ahead of the curve. They need to embrace what I call ‘millennial intelligence,’ an approach that embraces emerging, innovative alternative investments – and does not get bogged down in maintaining the status quo.”
Institutional investors such as hedge funds and pension funds need to be prepared to consider cryptocurrencies as assets, especially with the rapid approval of crypto ETFs. As regulators continue to approve crypto ETFs, the financial landscape is set to change dramatically, with cryptocurrencies becoming a staple in institutional investment portfolios.
LIAN Group, an investment firm that supports companies across industries including digital infrastructure, artificial intelligence, cryptocurrencies, and blockchain, has invested over $500 million since its inception. Among its notable projects is Cowa, Europe’s largest renewable energy blockchain infrastructure company.
