The launch of Bitcoin exchange-traded funds (ETFs) in January marked a significant milestone. However, financial advisors are approaching these new investment vehicles with caution.
BlackRock’s Chief Investment Officer of ETF and Index Investments, Samara Cohen, provided insights during the Coinbase State of Crypto Summit in New York City.
Why Financial Advisors Shun Bitcoin ETFs
explained that about 80% of Bitcoin ETF purchases are currently made by self-directed investors using online brokerage accounts. According to last quarter’s 13-F filings, hedge funds and brokerages have also been active buyers. However, registered investment advisors remain hesitant.
Cohen stated, “I would call them wary… That’s their job.” She emphasized the fiduciary responsibility that advisors have to their clients, noting that Bitcoin’s historical price volatility, which has reached 90% at times, necessitates thorough risk analysis and due diligence.
Bernstein, a major asset manager with $725 billion in assets, predicts that Bitcoin’s price could reach $1 million by 2033. The new forecast suggests a cycle-high of $200,000 by 2025. This prediction is driven by unprecedented demand from spot ETFs and Bitcoin’s limited supply.
WAX co-founder William Quigley also on the proliferation of ETFs for other cryptocurrencies like . “Wall Street is greedy,” Quigley said, suggesting that the success of Bitcoin ETFs will spur similar products.
However, he cautioned that if the momentum slows, ETF providers might shift focus or shut down underperforming ETFs due to a lack of demand.
