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Now that Bitcoin ETFs are trading on the U.S. public market, many large asset managers who were effectively locked out of cryptocurrencies finally have a way to access the leading digital currency.
The floodgates may be about to open for the $30 trillion wealth management industry. Analysts at Standard Chartered expect inflows to be between $50 billion and $100 billion in 2024.
“Bitcoin is starting to become a benchmark asset for the younger generation,” said Anthony Pompliano, founder of Pump Investments. “We know that most investors cannot outperform their benchmarks, so adding new benchmarks to your asset allocation is the only way to catch up.”
Bitcoin rose to $49,000 on Thursday, the highest level since December 2021, but fell to about $43,000 on Friday. It soared 150% last year after a brutal sell-off in 2022.
A wide swath of the investment community missed out on the 2023 bull market.according to Van Eck CEO Jan Van Eck, many trustees, financial advisors and banks have been specifically told in the past not to touch cryptocurrencies, primarily due to their unregulated nature. Ta.
That changed on Wednesday when the Securities and Exchange Commission authorized the sale of spot Bitcoin ETFs, allowing investors to access Bitcoin in the same way they buy stock or bond index funds. SEC Chairman Gary Gensler Continues to issue strict warnings That’s true when it comes to investing in cryptocurrencies, but that doesn’t stop them from being active.
for that Hundredfold Select Alternative FundMutual fund manager Advisors Preferred Trust invests up to 15% of its total assets in indirect Bitcoin exposure through funds and futures contracts, according to a recent prospectus.
“Most passive funds are looking for ways to improve performance,” Pompliano said.
Bitwise Asset Management is one of 11 issuers granted initial approval for Bitcoin products. Chief Investment Officer Matt Hogan said: Bitcoin ETF per bithas the lowest fees of 0.2% of its holdings and is primarily targeting financial advisors and family offices.
”This includes RIAs [registered investment advisors] “This is a multi-trillion dollar market, and ultimately that includes news agencies,” Hogan said, adding that advisers are “increasingly coming up with” allocations of 1% to 5%. I know they were waiting for an ETF. ”
In a recent financial advisor survey conducted in collaboration with VettaFi, a data-driven ETF platform, Bitwise found that 88% of advisors interested in purchasing Bitcoin said they would wait until a Spot Bitcoin ETF is approved. I discovered what I was waiting for. Among advisors who have already invested in cryptocurrencies, large investments (more than 3% of their portfolio) will more than double from the previous year to 47% in 2023.
“For the vast majority of people, a low-cost Bitcoin ETF is going to be the easiest way to do that,” Hogan said.
According to data from robin hood81% of Bitcoin ETF trading volume in the first week was in personal accounts, with the remainder in retirement accounts.
Even before the SEC announced Wednesday. 2022 CFA Institute Investor Confidence Survey It was found that 94% of state and local pension plans have some type of cryptocurrency exposure. New products may provide more legitimacy and cost savings for retirement plans that want to increase allocations.
Finance companies offer a range of advice on how best to enter this field.
in report Galaxy Digital said on its website in October that the “strongest marginal improvement” occurred when the portfolio’s Bitcoin allocation moved from 0% to 1%. Going back to 2019, tree of wisdom He says that adding Bitcoin to a portfolio that is traditionally 60% stocks and 40% bonds can “improve the risk-return profile,” and that from 2014 to 2019, “even a 1% allocation increased the basic portfolio. “This resulted in an 8.3% outperformance.”
fidelity analyzed Assessing its performance through mid-2022, it noted that “Bitcoin has boosted portfolio returns during certain periods in the past, but it has also been accompanied by significant volatility.” The company said that so far, Bitcoin has not performed well as a hedge against inflation, but “this has been difficult to assess given the low inflation throughout most of Bitcoin’s history.” Admitted.
Matt Walsh, founder of Castle Island Ventures, who previously led many of Fidelity Investments’ blockchain and crypto efforts, says the types of funds that will be the earliest to market are those focused on high-growth tech stocks. He said it is likely to become a fund. But he also sees broader appeal.
“I think you’ll see that in commodity-based portfolios as well, such as gold-based funds that see this as a kind of digital gold,” Walsh said.
clock: SEC approves Bitcoin ETF
