Investment Advisors Drive Bitcoin and Ether Institutionalization, But the Push Behind May Also Be a Threat

TradingKey - Fueled by the Trump administration’s aggressive push to legalize cryptocurrencies and stablecoins, Wall Street investment advisors have emerged as the largest known buyers of Bitcoin and Ethereum ETFs after retail investors — signaling a shift of crypto assets from speculative instruments to legitimate portfolio allocations.

Bloomberg data shows that investment advisors are currently the largest trackable group purchasing Bitcoin and Ethereum exchange-traded funds (ETFs), surpassing all other institutional categories.

James Seyffart, Bloomberg’s ETF analyst, noted that advisors are now the dominant holders among known ETH ETF investors, holding over 539,000 ether, worth approximately $1.3 billion. This positions them at nearly double the holdings of hedge fund managers (the second-largest group) and more than five times that of traders (the third-largest group).

Similarly, investment advisors are the largest holders of Bitcoin ETFs to date, with total holdings of 161,000 BTC, valued at over $17 billion.

Seyffart added that these figures are based on SEC Form 13F filings, which capture only about 25% of all Bitcoin ETF shares — meaning 75% of holders, including private wealth managers and offshore funds, are not required to disclose their positions.

Analysts say the growing exposure of investment advisors to Bitcoin and Ethereum marks a transition from speculation to portfolio-driven allocation, with significant room for further growth.

Beyond Bitcoin and Ethereum ETFs, several issuers are now filing for Solana and Chainlink ETFs, which could drive broader and more sustained adoption of cryptocurrencies.

The easing of the U.S. regulatory environment has been a key catalyst for traditional financial institutions like BlackRock and Fidelity to enter the crypto space. Regulatory developments are expected to play an increasingly important role in the adoption of crypto by financial advisors.

However, Kadan Stadelmann, Chief Technology Officer of blockchain platform Komodo, warned that if a less crypto-friendly government were to be voted in at the next election, it could throw a spanner in the works.

“The approach to crypto could include crackdowns, which could put a freeze over the institutional crypto market, and strike fear into the hearts of financial advisers that they could lose their licenses if they offer the products.”