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Crypto ETFs to form 5 per cent of hedge fund and pension fund portfolios: LIAN Group

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By 2025, cryptocurrency ETFs will form 5 per cent of hedge fund and pension fund portfolios, predicts blockchain expert Fiorenzo Manganiello, co-founder and managing partner of LIAN Group.

Manganiello’s view follows reports that BlackRock’s spot bitcoin ETF has accumulated USD16.7 billion of assets since it launched in January 2024, and the news that more and more cryptocurrency ETFs are also due to enter the market, with the Ether ETF set to gain final approval from the US’ Securities and Exchange Commission (SEC) this summer.

LIAN Group writes that it is an investment firm that builds and funds companies across multiple industries, including digital infrastructure, AI, cryptocurrency and blockchain. Since launch, they have deployed over USD500 million of invested capital. One company they have built is Cowa, a European blockchain infrastructure company running on renewable energy.

Manganiello, who also serves as a professor of blockchain technologies at Geneva Business School, believes these regulatory greenlights will soon lead institutional investors, such as hedge funds and pension funds, to view cryptocurrency as a viable asset. For Manganiello, it’s only a matter of time until these institutional players muscle into the crypto market, which has traditionally been dominated by retail investors.

Manganiello says: “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. Crypto is beginning to prove the critics wrong; it’s been given regulatory legitimacy.

“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.

“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 per cent, of hedge fund and pension fund portfolios.

“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. With crypto, it’s no different; institutional investors, like hedge funds and pension funds, have to be ready to consider crypto as an asset – and especially with crypto ETFs quickly gaining approval.”

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