According to CNBC, Bitcoin exchange-traded funds (ETFs), which launched in January, are slowly being adopted by financial advisors, says Samara Cohen of BlackRock. Currently, around 80% of Bitcoin ETF purchases are likely made by self-directed investors through online brokerage accounts. The iShares Bitcoin Trust (IBIT) was one of the funds that debuted earlier this year. Cohen, who is BlackRock's chief investment officer of ETF and index investments, mentioned that hedge funds and brokerages have also been buyers, as per last quarter's 13-F filings. However, registered investment advisors have been more cautious.
CNBC recently surveyed its Advisor Council to understand their hesitance towards these new products, which offer a regulated and familiar investment product for a new asset class that has attracted significant interest in recent years. The reasons varied from Bitcoin's infamous price volatility to the cryptocurrency being too new to have a substantial track record. Regulatory compliance and the crypto's reputation for fraud and scandal were also concerns for advisors. Cohen referred to these cautious financial advisors as 'wary', stating that their job is to construct portfolios, perform risk analysis and due diligence.
Cohen views Bitcoin ETFs as a bridge between crypto and traditional finance, especially for investors interested in allocating to Bitcoin without having to manage their risk across two different ecosystems. Prior to the ETFs, the existing entry points into crypto were insufficient for some investors' needs. Alesia Haas, Coinbase's chief financial officer, stated that Bitcoin is 'on a slow journey of adoption'. Blue Macellari, head of digital assets strategy for T. Rowe Price, suggested that some investors consider a 1% allocation to be a safe, comfortable amount. She sees portfolio allocations into Bitcoin as binary events, either greater than 1% or zero, but also recognized the cautious approach towards adoption.
