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, emerged as having a significant impact on Bitcoin’s liquidity dynamics.

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

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

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

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

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

These capital pools enter the market through regulated channels, in particular Bitcoin exchange-traded funds (ETFs). These flows could drive the next wave of liquidity. Rather than simply causing temporary price increases, they may support tighter bid-ask spreads, increased market depth and the ability to execute larger trades with less impact on prices.

This article discusses how investors linked to the oil economy influence it Crypto market liquidityshows what the next wave of liquidity could look like and explains why these funds are interested in Bitcoin. It also highlights Abu Dhabi’s role as a regulating center and the practical limits of liquidity.

Who are these oil-related investors and why are they important to market liquidity?

The term “High Oil Investors” refers to a network of capital managers whose resources are linked, directly or indirectly, to hydrocarbon revenues:

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

• High-net-worth individuals and family offices, which can move more quickly than sovereign funds and typically route demand through private banks and wealth advisors

• International hedge funds and asset managers are setting up operations in Abu Dhabi and Dubai, attracted in part by their proximity to regional capital.

As for liquidity, the main factor is not only the size of these allocations, but also how they are distributed. Many of these positions are driven by tools and platforms designed for institutional engagement, which can support a more robust market structure.

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

What does the upcoming liquidity wave actually mean?

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

• Larger and more consistent daily flows into regulated products rather than short-term spikes

• Deeper order books and tighter spreads in spot markets

• Increased activity of ETFs in the primary market, including the creation and redemption of shares, which typically involves professional hedging

• Stronger and more flexible Derivatives marketsincluding futures and options, supported by regulated venues and clearing services.

The main difference from previous cycles is the maturity of the market infrastructure. Spot Bitcoin ETFs provide a familiar and regulated avenue for traditional investors. At the same time, prime brokerage services, institutional custody, and regulated trading centers have reduced the operational friction of large-scale allocations.

Did you know? Authorized participants, not ETF issuers, typically handle the buying and selling of Bitcoin associated with ETF flows. These large financial companies create and redeem shares of ETFs and may hedge via spot and derivatives markets, affecting daily liquidity behind the scenes.

Conservative capital flows linked to Abu Dhabi

Spot Bitcoin ETFs have become a direct route to this type of capital. The structure and risks of cryptocurrency ETFs, e.g BlackRock’s iShares Bitcoin Trust (IBIT)Different from traditionally registered funds. For investors focused on governance and compliance, these distinctions may be important.

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

These figures indicate that capital in the Gulf is gaining exposure to Bitcoin through US-regulated listings. Even when implemented through direct purchases of ETFs, these inflows can support liquidity because market makers and authorized participants may hedge via spot and derivatives markets as flows change.

Why is the oil-linked capital of Abu Dhabi interested in Bitcoin?

There are several overlapping reasons why wealthy oil investors are interested in Bitcoin:

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

• Generational shifts in private wealth: Some wealth managers in the UAE have reported increased client interest in exposure to regulated digital assets, especially among young high-net-worth investors. This has pushed traditional platforms to expand their reach through regulated products and venues.

• Building supporting infrastructure: Besides direct allocations, parts of the region are investing in cryptocurrency market infrastructure, including regulated exchanges, custodial solutions and financial derivatives platforms. These systems can reduce the operational friction of institutional participation and may support more sustainable liquidity over time.

Did you know? Many spot Bitcoin ETFs use multiple custodians and insurance layers. This setting reflects ERM standards and reassures conservative investors who would never hold their own Private keys.

Geography matters: the role of the UAE as an organizing centre

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

Several developments have supported Abu Dhabi Global Market’s position as an institutional base. For example, Binance Acquired Regulatory authorization under the ADGM framework.

According to Reuters a reportThe Abu Dhabi Global Market witnessed rapid growth in assets under management, which the report linked to its proximity to Abu Dhabi’s sovereign capital complexes. when Market makersIf prime brokers, hedge funds and wealth platforms clustered in one jurisdiction, they could support sustained two-way flow, stronger hedging activity and tighter pricing.

How Oil-Linked Capital Can Boost Bitcoin Liquidity

Inflows from sovereign wealth funds linked to the oil economy could introduce an additional layer of institutional demand into the Bitcoin market, which could support liquidity and market depth.

• Flywheel ETF: Institutional purchases through spot ETFs can create shares, Hedging activity and related trade by professional brokers. This can lead to increased trading volume and tighter spreads, especially when inflows are constant.

• Large OTC and Prime Brokerage Trades: Large investors often prefer block deals and financing facilities to reduce market impact. This can encourage brokers to allocate capital and improve execution services.

• Regulated and Cleared Derivatives: A more developed and regulated financial derivatives ecosystem could improve price discovery and risk transfer. It can also help market makers manage risk more efficiently, which may support tighter rates 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 creating price gaps in the open stock market, especially after large overnight moves or weekend volatility in the cryptocurrency markets.

Institutional exits and liquidity limits

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

For example, Reuters I mentioned BlackRock’s iShares Bitcoin Trust (IBIT) saw record single-day net outflows of about $523 million on November 18, 2025, during a broader downturn in the cryptocurrency market. The report pointed to factors such as profit taking, fading momentum and a shift in preference towards gold.

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

Governments also shape the regulatory environment. Changes in policy and oversight could expand or restrict how funds access Bitcoin-related products and, in some cases, Bitcoin itself.