BlackRock’s Chief Investment Officer of ETF and Index Investments states that registered investment advisors remain “wary” of spot Bitcoin exchange-traded funds (ETFs).
While speaking to CNBC, Cohen noted that “self-directed investors” account for around 80% of the Bitcoin ETF purchases. Self-directed investors do not rely on financial advisors and investment managers to manage their portfolios.
Investment Advisors Hesitant to Adopt Bitcoin ETFs
According to Cohen, investment advisors are skeptical about Bitcoin ETFs’ potential. These firms have a fiduciary duty to their clients, who expect investment returns. Guaranteeing returns on Bitcoin ETFs is challenging, given the asset’s volatile price.
“This is an asset class that has had 90% price volatility at times in history, and their job is really to construct portfolios and do the risk analysis and due diligence. They’re doing that right now.”
Cohen’s remarks come as US spot Bitcoin ETFs saw four days of outflows last week. On June 14, outflows from these ETFs totaled $189 million. BlackRock’s iShares Bitcoin Trust (IBIT) ETF was the only product with inflows on Friday. However, according to Farside data, IBIT’s inflows remained low at only $1.5 million.
The weakening demand follows Bitcoin’s price decline. Last week, Bitcoin saw a drastic price decline from around $70,000 on June 10 to below $67K. BTC was trading at $66,635 on June 16 at 11:47 a.m. EST.
JPMorgan Skeptical New Investors Are Investing in Bitcoin ETFs
As Wall Street investment advisors steer clear of Bitcoin ETFs, JPMorgan has said the inflows into these products since launch are likely attributed to veteran crypto investors.
The leading US bank opined that most of the $16 billion inflows into spot Bitcoin ETFs within the five months of trading are not from new money entering the crypto space. Instead, the funds allocated to the ETFs came from digital wallets held on exchanges.
According to JPMorgan, the rotation of funds from exchanges to Bitcoin ETFs has resulted in a decline in Bitcoin exchange reserves. Bitcoin exchange reserves recently hit a record low, with around 220,000 BTC leaving exchanges since the launch of spot Bitcoin ETFs.
Nevertheless, institutional demand for Bitcoin ETFs was seen during the first quarter. The 13F filings made by top financial institutions to the US Securities and Exchange Commission (SEC) revealed institutions like Millenium Management, JPMorgan Chase, Susquehanna International Group, Elliot Capital, and the State of Wisconsin have allocated part of their investment portfolios into Bitcoin ETFs.
