Bitcoin vs Ethereum for sovereign wealth fund treasury diversification

Abu Dhabi sovereign wealth funds hold over $1 billion in BlackRock’s IBIT

Abu Dhabi sovereign wealth funds hold over $1 billion in BlackRock’s IBIT. Mubadala Investment Company owns 12,702,323 shares, valued at $631 million, which marks a 46% increase from its third-quarter filing. For much of last year, Mubadala maintained a position above 8 million shares. Al Warda Investments holds 8,218,712 shares worth $408 million. Together, these two Abu Dhabi entities control 20,921,035 shares. While institutional long positions in IBIT fell by 10% and average portfolio allocations to the fund plunged 28% recently, these state-linked buyers in Abu Dhabi used the price drop from $126,000 to $87,000 to increase their positions. BlackRock’s AUM in the fund is approximately $58 billion. These holdings appear in 13F filings, which institutional investment managers with at least $100 million in assets must submit quarterly to the SEC. I find the divergence between these sovereign buyers and the general institutional sell-off quite telling.

Norway’s indirect Bitcoin exposure

Norway’s Norges Bank Investment Management (NBIM) maintains an indirect Bitcoin exposure of 3,821 BTC, worth $400 million as of December 31, 2024. MicroStrategy dominates these holdings, as NBIM owns 0.72% of the company. This stake provides 3,214 BTC of exposure, valued at $514 million. Michael Saylor’s ongoing Bitcoin acquisitions influence this exposure. NBIM has invested in MicroStrategy since 2009, and the investment value in the company surged over sevenfold in the past year. Other holdings include 315.2 BTC via MARA, 106.9 BTC via Tesla, 80.6 BTC via Coinbase, and 76.7 BTC via Riot Platforms. This represents 0.71% ownership of MARA, 1.1% of Tesla, 0.85% of Coinbase, and 0.44% of Riot Platforms. Vetle Lunde of K33 Research notes that this exposure stems from rule-based sector weighting rather than a deliberate Bitcoin strategy. I consider this unintentional accumulation to be a massive oversight for a fund that grew its Bitcoin-linked assets from $23 million in 2020 to $356 million in 2024. The fund’s Bitcoin-linked investments now stand at 68,837 satoshis per capita, or $64 per person.

Ethereum staking yields and network economics

Ethereum staking rewards provide a yield that acts as a benchmark for the on-chain economy. On September 23, 2026, the network paid a 2.5% yield via ethereum.org and 2.55% via Staking Rewards. About 43.46 million ETH, which is 35% of the total 120.4 million ETH supply, remains staked. I note that Coinbase offers a retail rate of 1.69% because it takes a 35% commission. This yield comes from two primary sources: Consensus Layer rewards and Execution Layer rewards. Consensus Layer rewards come from newly issued ETH, while Execution Layer rewards come from priority fees and Maximal Extractable Value (MEV). During periods of high activity, real staking APY can spike above 5% or even 6%. The network currently has 1.07 million active validators. The upcoming Pectra upgrade will change the maximum effective balance for validators to 2048 ETH. I calculate that 10 ETH earns about 0.25 ETH over a year, which equals $673 at the $2,692 price per ETH. You already know that ETH volatility can erase these gains in a single day.

Saudi PIF strategy and the treasury verdict

Saudi Arabia’s Public Investment Fund (PIF) recently approved its 2026-2030 strategy. The $925 billion fund moves from rapid expansion toward value creation and capital efficiency. This strategy follows a period where assets grew from $150 billion in 2015 to over $900 billion. The fund organizes investments into three portfolios: Development, Strategic, and Private Sector. The Development portfolio targets tourism, urban development, and clean energy. The Strategic portfolio manages global assets to strengthen long-term financial positions. The Private Sector portfolio seeks to involve local companies in the kingdom’s growth. PIF contributed more than $243 billion to real non-oil GDP between 2021 and 2024. Between 2021 and 2025, the fund spent over $157 billion with the local private sector. The fund’s revised roadmap also addresses the delays and costs of projects like The Line and Trojena, and the suspension of the Mukaab skyscraper. This shift recalibrates Vision 2030, which focuses on minerals and artificial intelligence.

I compare the Bitcoin ETF accumulation in Abu Dhabi against the Ethereum staking yields for treasury diversification. Mubadala increased its IBIT holdings by 46% even as the market price dropped significantly. Meanwhile, Ethereum staking provides a steady yield, although a 2.5% return fails to offset a 10% fall in ETH price. If a sovereign fund wants pure capital appreciation, it selects Bitcoin through ETFs like IBIT. If it seeks cash flow, it selects Ethereum. Which asset provides the best hedge for a $925 billion fund?