Why Gulf Wealth Funds Are Driving Bitcoin’s Next Liquidity Cycle

Key takeaways

• In 2025, oil-linked capital from the Gulf, including sovereign wealth funds, family offices and private banking networks, has emerged as a significant influence on Bitcoin’s liquidity dynamics.

• These investors are entering Bitcoin primarily through regulated channels, including spot ETFs.

• Abu Dhabi has become a focal point for this shift, supported by large pools of sovereign-linked capital and the Abu Dhabi Global Market, which serves as a regulated hub for global asset managers and crypto market intermediaries.

• Oil-rich investors cite diversification, long-term portfolio construction, generational demand within private wealth and opportunities to build supporting financial infrastructure as key drivers of this interest.

Since Bitcoin (BTC) began its first sustained boom in 2013, many of its major surges have been driven by highly leveraged retail activity and trading on less-regulated platforms. After the first US Bitcoin exchange-traded fund (ETF), ProShares Bitcoin Strategy ETF (BITO), began trading on Oct. 19, 2021, Bitcoin attracted greater attention from institutional investors.

In 2025, a new source of capital began to play a larger role in shaping Bitcoin’s market structure: oil-linked funds from the Gulf region. This capital includes sovereign wealth funds, state-affiliated investment firms, family offices and the private banking networks that serve them.

These capital pools are entering the market through regulated channels, particularly spot Bitcoin exchange-traded funds (ETFs). These inflows could drive the next wave of liquidity. Rather than simply causing temporary price increases, they may support narrower bid-ask spreads, greater market depth and the ability to execute larger trades with less price impact.

This article examines how investors tied to the oil economy may influence crypto market liquidity, outlines what the next liquidity wave could look like and explains why these funds are interested in Bitcoin. It also highlights Abu Dhabi’s role as a regulated hub and the practical limits of liquidity.

Who these oil-linked investors are and why they matter for market liquidity

The term “oil-rich investors” refers to a network of capital managers whose resources are tied, directly or indirectly, to hydrocarbon revenues:

• Sovereign wealth funds and government-related entities in the Gulf, which oversee large asset bases and often shape regional investment trends

• Ultra-high-net-worth individuals and family offices, which can move more quickly than sovereign funds and typically channel demand through private banks and wealth advisers

• International hedge funds and asset managers establishing operations in Abu Dhabi and Dubai, drawn in part by proximity to regional capital.

For liquidity, the key factor is not only the size of these allocations but also how they are deployed. Many of these positions are routed through vehicles and platforms designed for institutional participation, which can support a more robust market structure.

Did you know? Spot Bitcoin ETFs do not hold futures contracts. Instead, they hold Bitcoin in custody. This means net inflows generally require purchases of BTC in the spot market, linking investor demand more directly to spot liquidity than to derivatives-based exposure.

What the next liquidity wave actually means

From a market-structure perspective, a liquidity wave is typically characterized by:

• Larger, more consistent daily flows into regulated products rather than short-lived spikes

• Deeper order books and narrower spreads in spot markets

• Increased primary-market ETF activity, including share creations and redemptions, which typically involves professional hedging

• Stronger, more resilient derivatives markets, including futures and options, supported by regulated venues and clearing services.

A key difference from earlier cycles is the maturation of market infrastructure. Spot Bitcoin ETFs provide a familiar, regulated vehicle for traditional investors. Meanwhile, prime brokerage services, institutional custody and regulated trading hubs have reduced operational friction for large-scale allocations.

Did you know? Authorized participants, not ETF issuers, typically handle Bitcoin buying and selling tied to ETF flows. These large financial firms create and redeem ETF shares and may hedge across spot and derivatives markets, influencing day-to-day liquidity behind the scenes.

Abu Dhabi-linked conservative capital flows

Spot Bitcoin ETFs have become a straightforward route for this type of capital. The structure and risk profile of crypto ETFs, such as BlackRock’s iShares Bitcoin Trust (IBIT), differ from traditionally registered funds. For investors focused on governance and compliance, these distinctions can matter.

During the third quarter of 2025, the Abu Dhabi Investment Council increased its exposure to Bitcoin by expanding its position in IBIT. A regulatory filing shows the fund had raised its stake from about 2.4 million shares to nearly 8 million by Sept. 30, with the position worth roughly $518 million at quarter-end based on the closing price.

These figures suggest that Gulf-based capital is gaining Bitcoin exposure through US-regulated listings. Even when implemented through a straightforward ETF purchase, such inflows can support liquidity because market makers and authorized participants may hedge exposure across spot and derivatives markets as flows change.

Why Abu Dhabi’s oil-linked capital is interested in Bitcoin

There are several overlapping reasons oil-rich investors are interested in Bitcoin:

• Diversification and long-term portfolio strategy: Gulf investors, particularly those linked to sovereign entities, often look for long-duration themes, diversification and global opportunities. Some institutions frame Bitcoin as a potential long-term store of value, in a similar way to how gold is used in multiasset portfolios, although Bitcoin’s risk profile and volatility are materially different.

• Generational shifts in private wealth: Some wealth managers in the UAE report rising client interest in regulated digital asset exposure, especially among younger high-net-worth investors. This has pushed traditional platforms to broaden access through regulated products and venues.

• Building the supporting infrastructure: Beyond direct allocations, parts of the region are investing in crypto market infrastructure, including regulated exchanges, custody solutions and derivatives platforms. These systems can reduce operational friction for institutional participation and may support more durable liquidity over time.

Did you know? Many spot Bitcoin ETFs use multiple custodians and insurance layers. This setup reflects institutional risk management standards and reassures conservative investors who would never self-custody private keys.

Geography matters: The UAE’s role as a regulated hub

Liquidity tends to concentrate when regulation, licensing and institutional counterparties are reliable. The UAE has built a multi-layered framework that combines federal oversight with specialized financial free zones, such as the Abu Dhabi Global Market (ADGM).

Several developments have supported ADGM’s positioning as an institutional base. For example, Binance obtained regulatory authorization under the ADGM framework.

According to a Reuters report, ADGM has seen rapid growth in assets under management, which the report linked to its proximity to Abu Dhabi’s sovereign capital pools. When market makers, prime brokers, hedge funds and wealth platforms cluster in one jurisdiction, it can support more continuous two-way flow, stronger hedging activity and tighter pricing.

How oil-linked capital can strengthen Bitcoin liquidity

Inflows from sovereign wealth funds tied to the oil economy can introduce an additional layer of institutional demand in the Bitcoin market, which may support liquidity and market depth.

• The ETF flywheel: Institutional purchases through spot ETFs can trigger share creations, hedging activity and related trading by professional intermediaries. This can increase turnover and tighten spreads, especially when inflows are steady.

• Large over-the-counter trades and prime brokerage: Major investors often prefer block trades and financing facilities to reduce market impact. This can encourage intermediaries to commit capital and improve execution services.

• Regulated derivatives and clearing: A more developed, regulated derivatives ecosystem can improve price discovery and risk transfer. It can also help market makers manage risk more efficiently, which may support tighter quotes in the spot market.

Did you know? Spot Bitcoin ETFs trade during stock market hours, while Bitcoin trades 24/7. This mismatch can contribute to price gaps at the stock market open, especially after major overnight moves or weekend volatility in crypto markets.

Institutional exits and the limits of liquidity

Institutional participation does not eliminate downside risk. Bitcoin remains volatile, and even widely used products can see sharp outflows.

For example, Reuters reported that BlackRock’s iShares Bitcoin Trust (IBIT) saw a record single-day net outflow of about $523 million on Nov. 18, 2025, during a broader crypto market pullback. The report cited factors such as profit-taking, fading momentum and a shift in preference toward gold.

Availability of access does not guarantee continued allocation. Liquidity flows in both directions, so the same infrastructure that supports large inflows can also enable rapid exits.

Governments also shape the regulatory environment. Policy and supervisory changes can expand or restrict how funds access Bitcoin-linked products and, in some cases, Bitcoin itself.