Bitwise CIO anticipates a rise in crypto ETP investments by the end of the year, predicting a 5% allocation standard for portfolios.

Matt Hougan, the Chief Investment Officer at Bitwise, expressed on May 14 that a significant transformation is taking place within the realm of financial advisory concerning investments in cryptocurrency.

Following his participation in a prominent advisory firm conference, Hougan conveyed his anticipation that most leading firms will provide access to crypto exchange-traded products (ETPs) by the conclusion of 2025.

He further emphasized the growing interest in crypto exposure, forecasting that the inflows into crypto ETPs could reach “many billions.”

According to data from Farside Investors, since their inception over a year ago, the combined daily inflows for US-traded crypto ETPs have exceeded $1 billion on five separate occasions.

Hougan noted that the standards for portfolio allocation are evolving, suggesting that “5% is the new 1%.” He elaborated that financial institutions are increasingly at ease with larger crypto allocations within conventional portfolios.

Adjustments in Institutional Crypto Allocations

Traditionally, asset managers have endorsed conservative allocations to crypto, largely due to concerns over volatility and concentrated risk. In December, BlackRock’s Investment Institute characterized a Bitcoin allocation of 1% to 2% as a “reasonable range” for diversified portfolios.

This guidance has found its way into implementation, as BlackRock integrated Bitcoin (BTC) into its model portfolio offerings valued at $150 billion through the iShares Bitcoin Trust (IBIT), targeting a 1% to 2% allocation.

The roll-out of US spot Bitcoin and Ethereum (ETH) ETPs in 2024 has established regulatory-compliant investment avenues for institutional clients, leading many advisors to reassess their crypto strategies.

Hougan also mentioned an uptick in advisor inquiries regarding Ethereum, sharing that he received more inquiries about the asset “in the past few days than in the previous six months.”

Parallel Interest in Bitcoin and Ethereum

Although Bitcoin continues to dominate in terms of scale, Ethereum has become a significant focal point for professionals, as noted by Hougan.

In April, Bitwise reported that US spot Bitcoin ETPs held $93.2 billion in assets under management (AUM) as of December 2024, while spot Ethereum ETPs reported a total of $6.3 billion in AUM.

Despite this gap, ownership of both products is widely distributed across major institutional categories.

Within Bitcoin ETPs, hedge funds (36.97%) and investment advisors (33.11%) represent the majority of institutional ownership.

Conversely, Ethereum ETPs exhibit a more balanced distribution among investment advisors (29.79%), brokerages (25.25%), and hedge funds (24.74%), with family offices showing a notable preference for Ethereum.

Investment advisors and hedge funds allocated 5.8% and 4.5% of their total crypto exposure to Ethereum, respectively, while family offices directed 25% of their nearly $173 million crypto allocations towards Ethereum.

Hougan’s observations underscore the prevailing expectations within the industry that access to crypto for professional investors is advancing into a newer phase of maturity. As the availability of products expands and allocation standards rise, cryptocurrency may increasingly contribute to regular portfolio construction.