The Next Wave of Bitcoin ETFs: Who Will Dominate Institutional Flows?

Current Landscape: ETFs as the Institutional On-Ramp

Spot Bitcoin ETFs, first approved by the SEC in January 2024, have transformed how institutions access digital assets, providing regulated, custody-secured exposure. By May 2024, BlackRock’s iShares Bitcoin Trust (IBIT) had already captured $10 billion in assets.

By mid-July 2025, U.S. spot Bitcoin ETFs had amassed over $51 billion in cumulative inflows. On July 10 alone, ETFs recorded a staggering $1.18 billion inflow, their second-highest day ever. Earlier in July, net inflows of roughly $408 million were led by Fidelity’s FBTC and ARK’s ARKB. Meanwhile, BlackRock’s IBIT remained the largest, with assets under management exceeding $80 billion.

Who’s Driving the Next Wave?

• BlackRock remains a dominant force. As of August, 2025, the firm held $104 billion in crypto assets, primarily Bitcoin, underlining its growing influence in institutional crypto adoption. Its ETF, IBIT, continues to draw significant capital.

• Fidelity and ARK21Shares (ARK) are also luring considerable inflows. On July 2, FBTC and ARKB alone accounted for $184 million and $83 million in inflows respectively.

• Bitwise has been vocal in projecting ETF adoption trends. It forecasts that institutional flows into Bitcoin ETFs could outweigh the precedent set by gold ETFs in their first year and expects the Big Four wirehouses (Merrill Lynch, Morgan Stanley, Wells Fargo, UBS) to start offering Bitcoin ETFs by year-end 2025.

Advisory Networks and RIAs

Advisory networks and registered investment advisers (RIAs) are increasingly seen as a pivotal driver of the next wave of Bitcoin ETF adoption. With trillions of dollars in client assets under management, RIAs are gradually integrating Bitcoin ETFs into portfolios, often positioning them as tools for diversification and long-term inflation hedging. Industry reports suggest that as compliance frameworks mature and custodial solutions become more standardized, more advisory firms will be able to recommend Bitcoin ETFs alongside traditional asset classes like equities and bonds.

Sovereign Wealth & Institutional Funds

While hedge funds recently trimmed exposure amid volatility, others increased investment. Abu Dhabi’s Mubadala sovereign wealth fund grew its IBIT stake to nearly $409 million. Meanwhile, Brown University entered the ETF market with a $4.9 million stake.

Structural Trends Supporting the Surge

Institutional investors increasingly see Bitcoin ETFs not just as speculative vehicles but as strategic tools within their inflation hedges and capital allocation models, with many funds adopting 1–3% Bitcoin allocations inside broader risk-parity or inflation-hedged strategies—an approach supported by the regulatory and custody frameworks that ETFs provide.

Forecasts of enormous capital inflows ahead remain bullish, with the UTXO Management report anticipating approximately $120 billion in institutional inflows into Bitcoin by the end of 2025, escalating to $300 billion in 2026 and spanning sovereigns, ETFs, treasury companies, and nation-states. Bitwise underscores that in 2024, U.S. spot Bitcoin ETFs already gathered $36.2 billion—a significantly rapid build-up.

Near-Term Catalysts and Risks

• Regulatory Tailwinds: The U.S. executive order allowing crypto in 401(k) plans, along with SEC’s Project Crypto and bipartisan legislative momentum like the Genius Act, are rapidly expanding institutional access points beyond traditional ETFs.

• Infrastructure & Custody: Traditional finance is steadily moving deeper into digital asset infrastructure. Major banks are building out custody and settlement systems designed to handle tokenized assets and ETF-linked products. This push reflects a broader recognition that regulated, large-scale custodial frameworks are essential for institutions seeking to scale exposure to Bitcoin and other digital assets through ETFs.

• Maturing Ecosystem: Crypto prime brokers (like FalconX) are scaling, enabling institutions with services such as lending, custody, and risk management, increasing the sophistication of Bitcoin ETF participation.

• Volatility and Sentiment Cycles: Institutional positions are not immune to market swings. In Q1 2025, amid price dips, entities like Millennium and Brevan Howard cut ETF holdings—demonstrating tactical repositioning.

Outlook: Who Will Lead?

Among large asset managers, BlackRock, Fidelity, ARK, and Bitwise are positioned as the most influential players. BlackRock maintains an edge in scale and brand prestige, while Fidelity and ARK have proven their ability to capture meaningful inflows. Bitwise, though smaller, has differentiated itself with research-driven projections and active engagement with institutional investors. Together, these firms are shaping the contours of the Bitcoin ETF market at the highest level.

Registered investment advisers (RIAs) and the major wirehouses, including Merrill, UBS, and Morgan Stanley, represent another critical channel. With vast client bases and well-established trust infrastructure, these firms could deliver explosive incremental demand. Their integration of Bitcoin ETFs into standard wealth advisory strategies would mark a turning point for mainstream adoption.

Sovereign wealth funds and institutional investors, such as Mubadala and leading universities, bring strategic legitimacy to the market. Their long-term capital and emphasis on diversification lend credibility to Bitcoin ETFs as enduring portfolio components rather than speculative bets.

Finally, advisory technology platforms and crypto prime brokers, such as FalconX and other crypto-native firms are enabling deeper institutional participation. By providing specialized services in custody, lending, and risk management, they ensure that Bitcoin ETFs can be deployed efficiently within sophisticated institutional frameworks.

Strategic Imperatives for Institutions

• Diversified Issuer Exposure: Institutions should consider allocations across multiple ETFs to mitigate issuer-specific risk and ensure access amid structural fund flows.

• Infrastructure Due Diligence: Custody robustness, regulatory compliance, operational transparency, and associated service frameworks are more critical than ever.

• Hedging Strategy Integration: Embedding Bitcoin within broader diversification or inflation hedging approaches, leveraging ETFs for transparent, regulated exposure, can enhance portfolio resilience.

• Monitoring Flow Dynamics: As demand shifts—for example, from retail to institutional or between ETF products—active monitoring allows timely strategy adjustments.

Beyond the First Wave

Bitcoin ETFs have shifted from speculative novelty to institutional cornerstone. The next phase of institutional flows will likely be driven by a confluence of big asset managers, expanding wealth advisory networks, sovereign/institutional investors, and refined crypto capital markets infrastructure. Those who dominate this wave won’t just shape Bitcoin’s trajectory, they’ll help define the future architecture of digital asset finance.