Bitwise CIO Predicts 5% Crypto Allocation Norm by 2025

Bitwise Chief Investment Officer Matt Hougan has expressed optimism about the future of crypto investments, particularly in the context of exchange-traded products (ETPs).

Hougan, speaking on May 14, highlighted a significant shift in the financial advisory space, noting that a "big unlock" is occurring regarding crypto investments. He predicted that by the end of 2025, most major advisory firms will enable access to crypto ETPs. This prediction comes after Hougan attended a major advisory firm’s conference, where he observed growing interest in crypto exposure.

Hougan expects that the new measure for inflows into crypto ETPs will be "many billions," indicating a substantial increase in institutional interest. He also noted that portfolio allocation norms for crypto are changing, with "5% is the new 1%." This shift suggests that institutions are becoming more comfortable with higher crypto weightings in traditional portfolios.

Historically, asset managers have advocated for modest crypto allocations due to concerns about volatility and risk concentration. In December, BlackRock’s Investment Institute recommended a 1% to 2% Bitcoin allocation as a "reasonable range" for multi-asset portfolios. This recommendation has been put into practice, with BlackRock incorporating Bitcoin into its $150 billion model portfolio offerings via the iShares Bitcoin Trust (IBIT), assigning a 1% to 2% weight in target allocations.

The launch of US spot Bitcoin and Ethereum ETPs in 2024 provided regulatory-compliant exposure mechanisms at scale for institutional clients, prompting many advisors to reevaluate their crypto positioning. Hougan reported increased advisor inquiries about Ethereum, stating he fielded more questions on the asset "in the past few days than the past six months."

While Bitcoin remains the dominant product by scale, Ethereum has emerged as a key area of curiosity for professionals. Bitwise shared in April that US spot Bitcoin ETPs held $93.2 billion in assets under management (AUM) as of December 2024, contrasting with spot Ethereum ETPs that totaled $6.3 billion in AUM. Despite the disparity, ownership of both products is dispersed across key institutional categories.

In Bitcoin ETPs, hedge funds (36.97%) and investment advisors (33.11%) account for most institutional ownership. On the other hand, Ethereum ETPs show more balanced exposure between investment advisors (29.79%), brokerages (25.25%), and hedge funds (24.74%), while family offices show a stronger preference for Ethereum. Investment advisors and hedge funds allocated 5.8% and 4.5% of their total crypto allocation to Ethereum, while family offices had 25% of their nearly $173 million crypto allocation targeted to Ethereum.

Hougan’s remarks reinforce industry expectations that professional investment access to crypto is entering a new maturity phase. As product availability widens and allocation norms shift upward, crypto may play a more regularized role in portfolio construction. This shift is likely to be driven by the increasing comfort of institutions with higher crypto weightings and the growing interest in Ethereum as a complementary asset to Bitcoin.