U.S. spot Bitcoin and Ethereum ETFs have reached a size of $111 billion, but the average size of active crypto hedge funds is only $132 million, and 91% of funds are below $1 billion. Binance Research points out that institutional capital is stuck in beta exposure; the key issue is not investment research capability, but the lack of an institutional-grade distribution layer and trusted data verification. (Background: Weak nonfarm payrolls cool rate-hike expectations! Wintermute: crypto ETFs pull in $1.1 billion, but BTC gains still lag U.S. stocks) (Additional context: August nonfarm payrolls crush bulls! Bitcoin plunges below $80,000, Ethereum loses $2,500, and $220 million liquidated across the network in 1 hour) Binance Research released a report stating that the combined assets of U.S. spot Bitcoin and Ethereum ETFs have reached $111 billion, while the average assets under management of active crypto hedge funds are only $132 million, and 91% of funds have less than $1 billion in assets. Institutional money is flowing heavily into passive vehicles, yet remains distant from active strategies; the core bottleneck is not investment research capability, but the lack of an institutional-grade distribution layer and trusted data verification. ETFs attract $111 billion; active funds average only $132 million Binance Research cites a joint survey by EY-Parthenon and Coinbase, which shows that 73% of institutions plan to increase their digital asset allocation this year. AIMA and PwC reports show that 55% of traditional hedge funds already hold crypto assets, up from 47% in 2024. However, most of this demand flows into passive investment vehicles, and 81% of surveyed institutions prefer to gain spot exposure through registered compliant products. As of the end of October 2026, the combined assets under management of U.S. spot Bitcoin and Ethereum ETFs were about $111 billion; by comparison, the average assets under management of crypto hedge funds were only $132 million, and 91% of funds were below $1 billion. Binance Research believes this divergence reflects a gap in market infrastructure rather than a lack of manager capability. Neutral strategies take 92.1% of capital, directional strategies get only 6.7% On the Capital Connect platform, directional strategy funds account for 44.3% of the fund count, but attract only 6.7% of platform capital; market-neutral, statistical arbitrage, and traditional-finance-style multi-strategy funds collectively control 92.1% of assets under management, with multi-strategy funds alone accounting for 14.3%. The average single investment amount for neutral strategies is about 11 times that of directional strategies, indicating that allocators prefer certainty when adding capital. Binance Research points out that platform capital flows reflect the real preferences of allocators, rather than being determined simply by the number of funds. Investor participation in market-neutral strategies has risen for two consecutive months, with cumulative growth of 30% since May; participation in statistical arbitrage strategies more than doubled over the same period and remained stable throughout October. In October, BTC fell 7.2%, yet directional funds still earned 1.9% In October, Bitcoin fell 7.2%, but directional funds still posted an average monthly return of +1.9%, while market-neutral funds averaged +1.0%. The number of investors in directional strategies also rebounded to 52 in October, returning to May levels; the average return since inception for directional funds improved from -11% in June to +3.7% in October. However, the return distribution for directional strategies is extremely wide, with the gap between the best- and worst-performing funds about 8 times that of neutral strategies. The median return is around +4%, and only 55% of funds achieved positive returns; by contrast, nine out of ten neutral strategy funds posted positive returns. Still, the top quartile of directional funds has delivered an average return of as high as +69% since inception, and allocators say they are still willing to pay as long as this kind of alpha can be delivered with controlled drawdowns. 80% of allocators put asset safety first; verifiability is the key Binance Research directly interviewed allocators and fund managers on the Capital Connect platform. 80% of surveyed allocators placed asset safety above historical performance and institutional reputation, and said that verified true on-exchange data can significantly enhance the credibility of due diligence. When evaluating managers, they value drawdown control more than simply strong paper returns. For fund managers, the real fundraising obstacle is not a lackluster return profile, but trust costs. Historical performance is difficult to cross-verify, and issues such as KYC, anti-money laundering, and counterparty compliance reviews seriously slow fundraising, leaving most capital to be raised only through personal referrals. After listing on the platform, some managers have been able to reach a broader investor base, compliant institutions, and pooled capital gathered from smaller amounts of money. Related reports The most insane IPO in U.S. stock market history! SpaceX listing draws $70 billion in retail orders, nearly filling the world’s total fundraising amount Global frenzy to go long U.S. stocks! Kobeissi warns: foreign capital inflow speed breaks a 20-year historical record; how long can the AI mania last? SharpLink scoops up 39,000 ETH in three days, adding to Ethereum on the dip after 8 months "Bitcoin and Ethereum ETFs pull in $111 billion — why can’t active crypto funds get institutional money?" This article was first published by BlockTempo (動區BlockTempo - the most influential blockchain news media).