The highly anticipated launch of bitcoin exchange traded funds (ETFs) finally occurred in January, with financial advisors gradually beginning to incorporate them into their strategies, according to Samara Cohen from BlackRock.
Currently, approximately 80% of bitcoin ETF purchases are believed to originate from “self-directed investors who independently allocate funds, often through online brokerage accounts,” Cohen noted during her speech at the Coinbase State of Crypto Summit in New York City. One of the funds introduced earlier this year was the iShares Bitcoin Trust (IBIT).
Cohen, who serves as BlackRock’s chief investment officer for ETF and index investments, highlighted that while hedge funds and brokerages have also shown interest, registered investment advisors have approached the new products with more caution.
Recently, CNBC surveyed its Advisor Council to understand their reservations about these new products. Reasons for caution ranged from bitcoin’s well-known price volatility to its status as a relatively new asset class lacking an established track record. Concerns also included regulatory compliance and the cryptocurrency’s history of fraud and scandals.
“It’s fair to say they are cautious – it’s their responsibility,” Cohen commented on the advisors’ skepticism. “Investment advisors are fiduciaries to their clients,” she added. “With bitcoin’s history of extreme price volatility, advisors are currently engaged in portfolio construction, rigorous risk analysis, and due diligence.”
Cohen sees bitcoin ETFs as a pivotal link between cryptocurrency and traditional finance, especially appealing to investors looking to allocate funds to bitcoin without navigating separate financial ecosystems. She noted that prior to ETFs, existing avenues into crypto were inadequate for many investors’ needs.
Alesia Haas, CFO of Coinbase, described bitcoin’s adoption as a gradual process, a sentiment echoed throughout the conference sessions. Blue Macellari, head of digital assets strategy at T. Rowe Price, highlighted the cautious yet evolving approach to integrating bitcoin into portfolios, noting that for many, adopting cryptocurrencies represents a significant shift in investment strategy that requires time and careful consideration.
Source: cnbc.com
