Coin Edition -
- 80% of Bitcoin ETF purchases come from self-directed investors.
- Advisors wary due to Bitcoin’s volatility and regulatory concerns.
- Bitcoin ETFs viewed as a bridge between crypto and traditional finance.
Despite slower-than-anticipated adoption, Bitcoin ETFs are slowly attracting investors according to BlackRock’s chief investment officer, Samara Cohen. Whereas initially popular among self-directed investors, institutional interest is seeing a rise, lately.
At present, approximately 80% of Bitcoin ETF purchases come from “self-directed investors,” mostly through online brokerage accounts. The iShares Bitcoin Trust (IBIT) is among the ETFs launched this year. Although hedge funds and brokerages have also shown interest, as evidenced by last quarter’s 13-F filings, the numbers for registered investment advisors remain significantly lower, Cohen noted at the recent Crypto Summit.
A CNBC poll revealed that advisors’ hesitancy is rooted in Bitcoin’s notorious price volatility, its nascent nature, and the lack of a significant track record. Concerns about regulatory compliance and the cryptocurrency’s association with fraud and scandal also contribute to their wariness.
Referring to the advisors, Cohen alluded:
“I would call them wary; that’s their job. An investment advisor is a fiduciary to their clients. 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.”
The IBIT’s price has fluctuated; it is currently trading at $37.30, reflecting a -1.58% change. Cohen highlighted the significance of this moment for providing crucial data, risk analytics, and determining Bitcoin’s share in a portfolio. “That’s what an advisor is supposed to do, so I think this journey that we’re on is exactly the right one, and they’re doing their jobs,” she added.
Despite the volatility inherent in these asset classes, Cohen views Bitcoin ETFs as a bridge between crypto and traditional finance, allowing investors to allocate to Bitcoin without managing risks across different ecosystems. Before the ETFs, the existing onramps into crypto were inadequate for some investors’ needs.
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