Source: Cointelegraph
Written by: Dilip Kumar Patairya
Translated by: Shaw Golden Finance
Key Points
In 2025, oil-related capital from the Gulf region, including sovereign wealth funds, family offices, and private banking networks, has become an important factor influencing Bitcoin liquidity dynamics.
These investors primarily enter the Bitcoin market through regulated channels, including spot exchange-traded funds (ETFs).
Abu Dhabi has become the focal point of this shift, backed by substantial funding related to sovereign wealth funds, with the Abu Dhabi Global Market serving as a regulated hub for global asset management companies and cryptocurrency market intermediaries.
Investors rich in oil resources believe that diversification, long-term portfolio construction, intergenerational demand for private wealth, and opportunities to build supporting financial infrastructure are key factors driving this interest.
Since Bitcoin first experienced sustained prosperity in 2013, its multiple significant price increases have been driven by high-leverage retail activity and trading on platforms with looser regulations. After the launch of the first Bitcoin ETF in the U.S. — ProShares Bitcoin Strategy ETF (BITO) — on October 19, 2021, Bitcoin attracted more attention from institutional investors.
In 2025, a new source of funding began to play a larger role in shaping the Bitcoin market structure: oil-related funds from the Gulf region. These funds include sovereign wealth funds, state-owned investment companies, family offices, and the private banking networks that serve them.
These pools of capital are entering the market through regulated channels, particularly spot Bitcoin ETFs. This influx of funds could drive the next wave of liquidity. They not only bring temporary price increases but may also help narrow bid-ask spreads, increase market depth, and enable traders to execute larger trades with less price impact.
This article explores how oil-economy-related investors influence liquidity in the cryptocurrency market, outlines the potential forms of the next wave of liquidity, and explains why these funds are interested in Bitcoin. Additionally, it highlights Abu Dhabi's role as a regulated center and the practical limitations of liquidity.
Who are the oil-related investors and why are they crucial for market liquidity?
The term "oil-rich investors" refers to a network of capital managers whose resources are directly or indirectly linked to oil and gas revenues:
Sovereign wealth funds and government-related entities in the Gulf region manage vast assets and often influence regional investment trends.
Ultra-high-net-worth individuals and family offices act more swiftly than sovereign wealth funds, typically guiding investment demand through private banks and wealth advisors.
International hedge funds and asset management companies are increasingly establishing operations in Abu Dhabi and Dubai, partly attracted by proximity to regional capital.
In terms of liquidity, the key factors are not only the scale of these capital allocations but also how they are deployed. Many of these positions are traded through tools and platforms designed specifically for institutional investors, which helps build a more robust market structure.
What does the next wave of liquidity mean?
From a market structure perspective, liquidity waves typically exhibit the following characteristics:
Daily inflows into regulated products are larger and more stable, rather than short-lived spikes.
The order book in the spot market is deeper, and spreads are narrower.
Increased trading activity in primary market ETFs, including share subscriptions and redemptions, often involving professional hedging operations.
A more robust and resilient derivatives market (including futures and options), supported by regulated trading venues and clearing services.
A key distinction from previous cycles is the maturity of market infrastructure. Spot Bitcoin ETFs provide traditional investors with a familiar and regulated investment tool. At the same time, high-quality brokerage services, institutional custody, and regulated trading centers reduce operational frictions for large-scale asset allocations.
Conservative capital flows related to Abu Dhabi
Spot Bitcoin ETFs have become a convenient investment avenue for such funds. Cryptocurrency ETFs like BlackRock's iShares Bitcoin Trust (IBIT) have different structures and risk profiles compared to traditional registered funds. These differences are crucial for investors focused on corporate governance and compliance.
In the third quarter of 2025, the Abu Dhabi Investment Authority increased its investment in Bitcoin by raising its stake in IBIT. Regulatory filings show that as of September 30, the fund had increased its holdings from approximately 2.4 million shares to nearly 8 million shares, with a value of about $518 million based on the quarter-end closing price.
These data indicate that Gulf region funds are gaining Bitcoin exposure through U.S.-regulated listed channels. Even simple ETF purchases can enhance liquidity, as market makers and authorized participants can hedge risks in the spot and derivatives markets based on changes in fund flows.
Why is Abu Dhabi interested in Bitcoin?
There are multiple overlapping reasons why oil-rich investors are interested in Bitcoin:
Diversification and long-term portfolio strategies: Investors in the Gulf region, especially those associated with sovereign entities, typically seek long-term investment themes, diversification, and global investment opportunities. Some institutions view Bitcoin as a potential long-term store of value, similar to gold's role in diversified asset portfolios, despite significant differences in risk characteristics and volatility.
Intergenerational shift of private wealth: Some wealth management institutions in the UAE report increasing interest from clients in regulated digital asset investments, particularly among younger high-net-worth investors. This has prompted traditional platforms to expand access to investments through regulated products and channels.
Building supporting infrastructure: In addition to direct investments, some institutions in the region are also investing in cryptocurrency market infrastructure, including regulated exchanges, custody solutions, and derivatives platforms. These systems can reduce operational frictions for institutional participation and may support more sustained liquidity over time.
Geography matters: The role of the UAE as a regulatory hub
When regulation, licensing, and institutional trading counterparties are reliable, liquidity often concentrates. The UAE has established a multi-layered framework that combines federal regulation with financial free zones like the Abu Dhabi Global Market (ADGM).
Several developments have solidified the position of the Abu Dhabi Global Market (ADGM) as an institutional trading platform. For example, Binance has obtained regulatory authorization under the ADGM framework.
According to Reuters, the asset management scale of the Abu Dhabi Global Market (ADGM) is growing rapidly, closely related to its proximity to the Abu Dhabi sovereign capital pool. When market makers, high-quality brokers, hedge funds, and wealth management platforms congregate in the same jurisdiction, it facilitates smoother two-way capital flows, stronger hedging activities, and more accurate pricing.
How oil-related capital enhances Bitcoin liquidity
The inflow of funds from sovereign wealth funds related to the oil economy can introduce additional institutional demand to the Bitcoin market, potentially enhancing market liquidity and depth.
ETF flywheel effect: Purchases made by institutional investors through spot ETFs can trigger share subscriptions, hedging activities, and related trades by professional intermediaries. This increases trading volume and narrows spreads, especially when fund inflows are stable.
Block trades and institutional brokerage: Large investors typically prefer block trades and financing services to reduce market impact. This can encourage intermediaries to invest and improve execution services.
Regulated derivatives and clearing: A more developed and regulated derivatives ecosystem can improve price discovery and risk transfer. It can also help market makers manage risk more effectively, potentially contributing to more accurate pricing in the spot market.
Institutional exits and liquidity constraints
Institutional participation does not eliminate downside risks. Bitcoin remains highly volatile, and even widely used products can experience significant capital outflows.
For example, Reuters reported that during a broader pullback in the cryptocurrency market, BlackRock's iShares Bitcoin Trust (IBIT) recorded a single-day net outflow of approximately $523 million on November 18, 2025. The report noted that profit-taking, weakening market trends, and a shift in investor preference towards gold were factors contributing to the outflow.
The ease of capital inflows does not guarantee sustained allocations. Liquidity is a two-way flow, and thus, the infrastructure supporting large capital inflows can also facilitate rapid capital outflows.
Governments can also influence the regulatory environment. Changes in policy and regulation may expand or restrict access to Bitcoin-related products, and in some cases, even affect access to Bitcoin itself.
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